The Central Board of Indirect Taxes and Customs (CBIC), vide circular no. 206/18/2023-GST issued on 31st October 2023 has provided the clarification on GST rate of r job work for processing of “Barley” into “Malted Barley”.
According to CBIC’s circular, references have been received seeking clarification regarding the applicable GST rate for job work services involved in converting barley into malt. The question is whether such services should be taxed at the 5% rate, which is specified for “job work related to all food and food products falling under Chapters I to 22 of the customs tariff,” or at the 18% rate, which is indicated for “services related to job work in the manufacture of alcoholic liquor for human consumption.”
Malt is considered a food product, as it can be directly consumed as a part of food preparations, utilized as an ingredient in various food products, and also employed in the production of beer and alcoholic liquor for human consumption. However, regardless of its eventual use, the transformation of barley into malt is fundamentally job work related to food products.
To provide clarity, it is now confirmed that job work services in the context of malt manufacturing fall under the entry at Serial Number 26(i)(o), which pertains to “job work in relation to all food and food products within Chapters I to 22 of the customs tariff.” This applies irrespective of the intended use of the malt and is subject to a 5% GST rate.
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