Services by way of Job Work of Pharmaceutical Drugs attracts 12% GST: AAR [Read Order]

pharmaceutical Drugs - AAR - GST - Taxscan

The Gujarat Authority of Advance Ruling (AAR) ruled that the Services by way of job work on pharmaceutical Drugs attracts 12% Goods and Service Tax (GST).

The applicant, M/s. Romano Drugs Pvt. Ltd. submitted that Section 2(68) of the CGST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person”. The job worker is required to carry out the process specified by the principal on the goods owned by him. Sl. No. 26 of the Notification No. 11/2017-CT (Rate) dated 2-6-2017 defines the GST rates to be charged on manufacturing services on physical inputs (goods) owned by others. That the Notification No.11/2017 dated 28-06- 2017 was amended vide Notification No.20/2019 dated 30.09.2019, and the following entry was inserted at serial number-26 namely “(id) Services by way of job work other than (i), (ia), (ib) and (ic) above”, which is chargeable to CGST at the rate of 6% and (iv) Manufacturing service on physical inputs (goods) owned by others other than specifically specified, is chargeable to CGST at the rate of 9%.

The applicant has submitted that as per the CBIC Circular, if any service provided by way of treatment or processing undertaken by a person on goods belonging to another registered person will be considered under the Job work service and is liable at the rate of 12% GST.

The applicant sought the advance ruling in respect of rate of tax applicable to the Services by way of job work on Diphenylmethoxy ‘N’ N-diethylaminethanol HCI (Job work of pharmaceutical Drugs) , undertaken by the supplier (applicant) as per CBIC issued clarification on Job work vide circular No.126/45/2019- GST dated 22.11.2019 i.e., whether the GST rate 18% or 12% is to be charged by the supplier.

The coram of Sanjay Saxena and Arun Richard ruled 12% GST is payable on Services by way of job work on Diphenylmethoxy ‘N’ N-diethylaminethanol HCI (Job work of pharmaceutical Drugs).

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