Case-1-Bharat Petroleum Corporation Ltd.  98 taxmann.com 436 (AAR – KERALA)
Issue-Classification of Activity as “Job Work”
Observation BY AAR-The applicant being principal sends goods such as Re-gasified Liquefied Natural Gas (RLNG), De-mineralized water (DM Water), Hydrogen Rich off Gas and raw water’ to M/s. Prodair Air Products for treatment or process. The industrial gases are produced out of the major materials or inputs supplied by the applicant. The job worker uses some minor, ancillary goods to complete the process. The application of minor items by the job worker would not detract it being a job work. Therefore, the processing undertaken by M/s. Prodair Air Products on the goods belong to the applicant, another registered person qualifies as job work even if it amounts to manufacture.
Held-The activity of the applicant of sending Regasified Liquefied Natural Gas (RLNG), De-Mineralized Water (DM Water), Hydrogen Rich off Gas and Raw water free of cost to M/s. Prodair Air Prodcts Pvt. Ltd. For manufacture of Hydrogen, Nitrogen and Steam manufactured out of its amount to ‘job work’ us defined under Section 2(68) read with Section 143 of the CGST/KSGST Acts.
Case-2- Crown Beers India (P.) Ltd.  107 taxmann.com 468 (AAAR-MAHARASHTRA)
Issue: Classification of Activity as “Job Work” and whether Job Work of brewing, bottling and supplying Products in relation to beer would be eligible for 5% GST (2.5% CGST +2.5 % SGST) falling within the ambit of “food or food products”
Observation by AAAR on the nature of Transaction- AAR made following observations about the scope of activities of Principal and the Job Worker-
Principal- Although Job Worker is undertaking purchase transaction of raw materials and other ingredients used in manufacture of beers but principal is deciding not only qualities and varieties of the materials, but also the suppliers from whom these materials are to be purchased along with the terms and conditions for the purchase transaction and the cost of purchase of entire raw materials and other inputs is incurred by the Principal. The Job Worker is undertaking these purchase transactions simply as an agent or representative of the Principal as they do not enjoy any autonomy, whatsoever, while performing these transactions.
The Principal bears the cost of insurance in respect of materials, Products and work in process and accordingly is the beneficiary of any insurance claims which may arise and accrue in future. The risks and rewards arising from business of sale of Products under this Agreement belong solely and exclusively to the Principal.
Job Worker- The activities of Job Worker involve carrying out activities of brewing, bottling and packaging on the goods belonging to another registered person. The final manufactured Products i.e. beer also belong to and are owned by the Principal, as the final products are delivered by the Job Worker to the buyers, which are identified by the Principal and entire sale consideration against the same is credited to the designated bank account meant for manufacturing expenses and sale proceeds of the Product i.e Beer. The Agreement between the Job Worker and Principal provide that the costs incurred on purchase of Materials, other expenses set out in Schedule II and the sale revenue generated from the sale of products will always be incurred on account of and inure to the benefit of Principal. It is therefore clearly understood and acknowledged by the parties that any surplus arising or recorded in the Manufacturing and Sales Account will always belong to Principal and would be utilized by Principal at its sole discretion.
Held- All these above clauses clearly establishes that the actual owner of the finished Product is the Appellant and not the PIL as the entire sale process viz.- identification of the actual and potential buyers and recovery of the sale proceeds etc. is controlled and administered by the Appellant, making them accountable for the sale of the Products. All the above discussions and finding leads us to this fact that the PIL is acting merely as the “Job Worker” for the Appellant.
Question before AAAR on the Tax Rate on Job Work- Since beer is classifiable under item 2203 00 00 of the First Schedule to the Customs Tariff Act, 1975, whether Job Work i.e. brewing, bottling and supplying Products in relation to beer would be liable to 5% GST (2.5% CGST +2.5 % SGST) in accordance with the entry 26(f) bearing Heading 9988 of the Notification 11/2017 dated 28.06.2017.
Held-There is no dispute about classification of Beer under heading 2203 but all the products classifiable under Chapter 1 to 22 do not attract 2.5% CGST under entry no. 26(f) of Notification no. 11/2017-C.T.(Rate) dt. 28.06.2017. Only food and food products of these chapters are eligible for this exemption. There is no definition of food and food products under GST Acts. However, Hon’ble Supreme Court has discussed this issue in detail in the matter of Parle Exports (P.) Ltd. (supra) and decided that non -alcoholic beverages were not eligible to exemption as food products. Everything consumed by human cannot be considered as food or food products for the purpose of exemption from GST. The context, spirit and reason of law need to be examined to extend exemption. Hon’ble Supreme Court in the said judgment had opined that ” it cannot be contended that expensive items like Gold-Spot base, Limca-base or Thums up-base were intended to be given exemption at the cost of public exchequer/’ Similarly, it would have never been the intention of law to exempt expensive item like ‘alcoholic liquor’ under the category of food and food products even though the same is for human consumption. In view of the above two judgments of Hon’ble Apex Court, we conclude that the benefit of exemption under entry no. 26(f) of Notification 11/2017-C.T.(Rate) dt. 28.06.2017 is not available to alcoholic liquor for human consumption.
Case-3-Industrial Engineering Corporation  110 taxmann.com 497 (AAR – KERALA)
Issue-Whether transaction wherein goods are directly made available to job worker by using process “Bill to the applicant and ship” and dispatched directly from job work unit to the prospective customers using delivery challan and E-way bill of applicant after Job Work are eligible to be categorized as “Job Work”
Facts- Applicant purchases all raw materials such as CR sheets/Tin sheets, paints, closure fittings and locking ring and delivers the same as such to the job work unit. The purchase orders are directly placed to the suppliers and direct delivery made to job worker by using the process “Bill to the applicant and ship” to the job work unit. The job worker executes the work in accordance with the specific terms and conditions of the applicant. The job work unit will execute the manufacturing works including finishing process at their premises under the supervision and expertise of the applicant. The job work unit is having sufficient facility and utilize their machinery also. The finished goods are required to be directly dispatched from job work unit to the prospective customers using the delivery challan and E-way bill of the applicant. The job worker unit is free to dispose the scrap and applicant is not claiming any Cost on such scrap.
Held- The person who does the job work is termed as ‘job worker’. The ownership of the goods does not transfer to the job worker but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods. Sending goods for job work is not a supply as such, but it acquires the character of supply only when the inputs sent for job work are neither received back by the principal nor supplied further by the principal from the premises of the job worker within a period of one year of being sent out. The responsibility for sending the goods for job work as well as bringing them back or further supply has been cast on the principal.
The job worker, being a supplier of services, is liable to pay GST if he is registered. He shall issue an invoice ac the time of supply of the services as determined in Terms of section 13 read with section 31 of the CGST/SGST Act, The value of services would be determined in terms of section 15 of the CGST/SGST Act and would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal. The waste and scrap generated during the job work maybe supplied by the registered job worker directly from his place of business as per Section 143(5) of CGST/SGST Act.
Case-4- Inox Air Products (P.) Ltd  94 taxmann.com 144 (AAR-GUJARAT)
Issue-Whether Air above the land supplied free of cost to the Job Worker would be treated as “goods supplied by the Principal”
Observation by AAR- Atmospheric Air, Industrial Water and Electricity is required to manufacture industrial gases viz. Oxygen, Nitrogen and Argon.
Atmospheric Air, which is required for manufacturing industrial gases viz. Oxygen, Nitrogen and Argon, there is no reference in the agreement. The owner of the land is also the owner of the vertical column of air above the land, which position derives from the Latin maxim cuius est solum, eius est usque ad coelum et ad inferos (Translated : For whoever owns the soil, it is theirs up to Heaven and down to Hell). The aforesaid provision clearly stated that the ownership of land includes ownership of the air vertically above the land. In light of the settled principle of law, the ownership of land extends to the ownership of the air vertically above it. Accordingly, the air (above the land which is owned by ESSAR), clearly belongs to ESSAR.
In terms of arrangement between parties, M/s. Essar is required to provide land and all other inputs for the processing of gases by INOXAP. Since owner of land would own ambient air above its land, in effect, M/s. Essar has provided the same to INOXAP in terms of the arrangement (along with electricity, industrial water etc.)
In view of the aforesaid statutory position and commercial arrangement, it is clear that the Atmospheric Air used by the applicant belongs to M/s. Essar. Thus, all the inputs viz. Atmospheric Air, Industrial Water and Electricity belongs to M/s. Essar.
Held-As all the necessary ingredients of the definition of ‘job work’ are fulfilled in this case, the activity of manufacturing of industrial gases viz. Oxygen, Nitrogen and Argon by the applicant amounts to ‘Job Work’ as defined under Section 2(68) of the said Acts.
Case-5- Irene Rubbers  105 taxmann.com 227 (AAR – KERALA)
Issue-Classification of activity as “Job Work” and Tax Rate on Job Work Services applied on Goods belonging to Chapter 50 to 63 of the Customs Tariff Act, 1975
Observation by AAR- M/s. Irene Rubbers is a job worker engaged in production of Rubber backed and rubber edged coir mats and polypropylene mats of various designs and size as required by the principal on the materials provided by the principal- The materials like coir mats and mattings covered under HSN 5702 and tufted carpets covered under HSN 5703 are supplied by the principal for executing job works along with moulds in the required designs. The rubber compound required for the rubber backing and edging is prepared in a mixing mill. The petitioner cut the materials in desired size and mixing the material with molten rubber compound. Accordingly, the molten rubber compound and coir materials are fused/vulcanized perfectly with the aid of hydraulic press. Thereafter, the edges are cut for finishing and the finished product like rubber backend mat of coir, polypropylene of felt will be delivered to the principal.
Nature of Activity-Any treatment or process undertaken by a person on the goods belonging to another registered person is a job work as defined in Clause (68) of Section 2 of the CGST/SGST Act. As per the Circular No.38/12/2018 dtd-26-03-2018 issued by CBEC, it is clarified that, in addition to the goods received from the principal, the job worker can use his own goods for providing the services of job work. The services are performed on physical inputs owned by units other than units providing the services. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Under job work services, the output is not owned by the unit providing this service. Therefore, the value of the services is based on the service charge paid, not the value of the goods manufactured. The job worker, as a supplier of services, is liable to pay GST if he is liable to be registered. He shall issue an invoice at the time of supply of the services. The value of services would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal.
Tax Rate-The materials supplied for execution of job work are falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975. The materials like carpets, coir etc, are supplied by the principal for executing job works along with moulds in the required designs. All the raw materials supplied by the principal are covered under Chapter 50 to 63 of the Customs Tariff Act, 1975, Therefore the job work services applied on such goods squarely come under Sl.No.26(i)(b) of Notification 11/2017 CT (Rate) dated 28.06.2017 and taxable @ 5% GST.