QUESTION

We do some job work in our factory as follows: 1) Maint. & repair services 2) Manufacturing service In view of notification No. 11/2017, maintt. & repair service is classified under SAC code 9987 and manufacturing service is classified under 9988. By the recent circular and notification, job work (including manufacturing service, sac 9988) for registered unit is taxable at rate 12% My query is : 1) Whether maintt. & repair service (Sac 9987) comes under job work and if yes, 12% is whether applicable for these services? 2) What is different between Manufacturing service & Maintt. & repair service. Thank you, Regards, Saji Puthenchira Kabra Extrusion technik ltd, Daman.

ANSWER

Law Applicable:

 SECTION 2 OF CGST ACT
(68) 'job work' 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;

(72) 'manufacture' means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term 'manufacturer' shall be construed accordingly;

Interpretation: Job work is covered under SAC 9988 and repair and maintenance is covered under SAC 9987 and rates are specified in N/N 11/2017 CT (R) accordingly.

Change in rate of tax in case of job work (including manufacturing) from 18% to 12%, it is only in respect of job work done on inputs of Registered person, whereas job work done on inputs of unregistered person is still taxable @ 18%. It has no impact on tax rates of repair and maintenance service covered under 9987

Conclusion: Repair and maintenance service is covered under 9987 and not in job work service under 9988, therefore taxable at the rates applicable as per N/N 11/2017 CT (R) i.e. 5% or 18% as the case may be