Central Tax Circulars

CGST Circular 126/2019

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) / The Principal Director
Generals/ Director Generals (All)

Madam/Sir,

Subject– Clarification on scope of the notification entry at item (id), related
to job work, under heading 9988 of Notification No. 11/2017-Central Tax (Rate)
dated 28-06-2017-reg.

1) I am directed to say that doubts have been raised with regard to scope of the
notification entry at item (id) under heading 9988 of Notification No.
11/2017-Central Tax (Rate) dated 28- 06-2017 inserted with effect from
01-10-2019 to implement the recommendation of the GST Council to reduce rate of
GST on all job work services, which earlier attracted 18 % rate, to 12%. It has
been stated that the entry at item (id) under heading 9988 of Notification No.
11/2017-Central Tax (Rate) dated 28-06-2017 inserted with effect from
01-10-2019, prescribes 12% GST rate for all services by way of job work. This
makes the entry at item (iv) which covers “manufacturing services on physical
inputs owned by others” with GST rate of 18%, redundant.

2) The matter has been examined. The entries at items (id) and (iv) under
heading 9988 read as under:

(3)	(4)	(5)
(id) Services by way of job work other than (i), (ia), (ib) and (ic) above;	6	–
(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above.	9	–

3) Job work has been defined in CGST Act as under.

“Job work means any treatment or processing undertaken by a person on goods belonging to
another registered person and the expression ‘job worker’ shall be construed accordingly.”

4) In view of the above, it may be seen that there is a clear demarcation between scope of
the entries at item (id) and item (iv) under heading 9988 of Notification No. 11/2017-Central Tax
(Rate) dated 28-06-2017. Entry at item (id) covers only job work services as defined in section 2
(68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a
person on goods belonging to another registered person. On the other hand, the entry at item
(iv) specifically excludes the services covered by entry at item (id), and therefore, 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.

5) Difficulty if any, in the implementation of this Circular may be brought to
the notice of the Board.