In the case of Shree Avani Pharma [Advance Ruling No. GUJ/GAAR/R/2023/32 dated November 03, 2023], the AAR, Gujarat, ruled that the job work services offered by the applicant fall under Sr. No. 26(id) of Notification No. 11/2017-Center Tax (Rate) dated June 28, 2017. The services are classified under Heading SAC 9988, making the applicant liable to pay GST at a rate of 12 per cent.
Key Details of the Case of Shree Avani Pharma
Shree Avani Pharma, a partnership business, offers job work for using raw materials to convert them into finished products on behalf of GST-registered clients. During the job work process, the clients retain ownership of the goods.
The applicant sought clarification on whether their job work services fall within the scope of Sr. No. 26 of Notification No. 11/2017-CE (Rate) dated June 28, 2017, as amended by Notification No. 20/2017-CT(Rate) dated September 30, 2019, and Heading SAC 9988. They also inquired about the applicable GST rate, which is 12 per cent (6 per cent CGST and 6 per cent SGST).
The Matter
Is the applicability of a 12% GST rate on the job work performed on goods owned by other registered individuals under GST accurate?
Gujarat GST AAR Judgement
The AAR, Gujarat, in Advance Ruling No. GUJ/GAAR/R/2023/32, made the following determinations:
- The heading 9988 pertains to services of manufacturing on physical inputs (goods) owned by others, as defined in Section 2(68) of the Central Goods and Services Tax Act, 2017.
- Based on a joint reading of the Notification and Circular No. 126/45/2019-GST dated November 23, 2019, Sr. No. 26(id) of the Notification applies when job work is performed on goods owned by another verified individual. On the other hand, Sr. No. 26(iv) includes job work provided on goods about unregistered individuals.
- Consequently, the AAR ruled that the job work services offered by the applicant fall under Sr. No. 26(id) of the Notification and Heading SAC 9988. As a result, the applicant is accountable for paying GST at a rate of 12%.
| Applicant Name | Shree Avani Pharma |
| GSTIN of the applicant | 24ABTFS4354F1ZW |
| Date | 03.11.2023 |
| Applicant | Manish Patel |
| Gujarat GST AAR | Read Order |
