The Gujarat Authority for Advance Rulings (GAAR), in the case of M/S. SHREE AVANI PHARMA vide Order No. No.- GUJ/GAAR/R/2023/32 dated 03.11.2023, has held that job work services  which are carried out on physical inputs/goods which are owned by registered person would fall within the purview of Sr. No. 26(id) of the Notification No. 11/2017-CE (Rate) dated June 28, 2017 and Heading SAC 9988 and the Applicant therefore, is liable to pay GST at the rate of 12 percent.

In this case, the Applicant 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 advance ruling on whether job work services provided by them would 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.

The GAAR observed that the description of the heading 9988 is manufacturing services on physical inputs (goods) owned by others. Job work as defined under section 2(68) of the CGST Act, 2017, means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly.

Also, stated that conjoint reading of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended, together with circular No. 126/45/2019-GST dated 22.1 1.2019, clearly depicts that there is a clear demarcation between scope of the entries at item (id) and item (iv) in so far as heading 9988 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 is concerned. While entry (id), ibid covers job work services as defined in section 2(68) of CGST Act, 2017, in respect of treatment or processing undertaken by a person on goods belonging to another registered person, the entry (iv) on the other hand while excluding the services covered by entry (id), covers only such services which are carried out on physical inputs/goods which are owned by persons other than those registered under the CGST Act.

To summarize, it was held that The service in question falls within the ambit of entry Sr. No. 26(id) of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended vide notification No. 20/2017-CT (Rale) dated 30.9.2019 and is classifiable under SAC 9988 and will attract GST @ 12%.