Under GST, job work related to alcoholic liquor is treated differently from other types of job work. As per the GST law, job work related to alcoholic liquor is classified as a "supply of goods" rather than a "supply of service". This means that the value of the job work done on alcoholic liquor will be included in the assessable value of the finished product, and the applicable GST rate on the finished product will be charged on the value of job work.
For instance, if a job worker undertakes work on alcoholic liquor which has a value of Rs. 10,000 and the applicable GST rate on alcoholic liquor is 18%, then the value of job work will be included in the assessable value of the finished product and the 18% GST will be charged on the entire value of the finished product.
It is important to note that this classification is specific to job work related to alcoholic liquor and does not apply to other types of job work, which are classified as "supply of service" under the GST law.
The classification of job work related to alcoholic liquor has been a topic of debate under the GST regime. The issue arises as job work relating to alcoholic liquor is subjected to a different GST rate than the rate applicable to the alcoholic liquor itself.
Job work is defined as any treatment or process undertaken by a person on goods belonging to another person, in relation to the manufacture of specified goods. As per Schedule II of the Central Goods and Services Tax Act, 2017, job work can be considered as a supply of goods or services, depending on the nature of the job work.
In the case of job work related to alcoholic liquor, the classification for levy of GST is done under Heading 9988 of the GST Tariff. As per this heading, job work services related to alcoholic liquor for human consumption is taxed at the rate of 18%. However, alcoholic liquor for human consumption falls under Heading 2203 of the GST Tariff and attracts a higher rate of GST.
There has been ambiguity in the classification of job work related to alcoholic liquor, as the classification under Heading 9988 may result in a lower GST rate being applied than the rate applicable to the alcoholic liquor itself. To resolve this issue, the GST Council has formed a committee to examine the issue and provide recommendations. Until a final decision is reached, taxpayers must carefully classify job work related to alcoholic liquor for levy of GST.
Goods and Services Tax (GST): An Overview
Presumptive Taxation for Business and Profession
Inverted Duty Structure under GST and how to claim its Refund
