Levy and Collection of Tax on supply of services by Job worker:
The concept of supply has been adopted to levy tax in place of manufacture of excisable goods and supply of taxable services. Section 7 of CGST Act, for the purpose of expression of “Supply” includes as specified at sub-section (d) that “the activities to be treated as supply of goods or supply of services as referred to in Schedule II”.
Schedule II of Section 7 provides the activities to be treated as supply of goods or supply of services and schedule II (3) any treatment or process which is applied to another person’s goods is a supply of services.
Thus, Job work process has carried by the Job worker on behalf of the principal and will attract GST on job work Charges, in case of threshold limit of `20 lakh of aggregate turnover exceeds in a financial year of a job worker. If the aggregate turnover exceeds the threshold limit the job worker would be required to obtain registration under section 25.
Further, the value of goods or services used by the job worker for carrying out the job work will be included in the value of services supplied by the job worker. After completion of job work, if the goods directly supply to the customers from the premises of the job worker , the value of such supply will be included in the aggregate turnover of the principal.
It is to be noted that in the erstwhile Central Excise and Service Tax provisions where job work charges or supply of services are subject to service tax only, if the process carried by job worker does not amount to manufacture.