M/s VRM Ltd. is a registered job worker in the State of Haryana under GST and providing various job work services related to metal products. On 30…

CA Final · Indirect Tax Laws · PYQS · May 2025
M/s VRM Ltd. is a registered job worker in the State of Haryana under GST and providing various job work services related to metal products. On 30 th April, 2024, VRM Ltd. received steel cabinets worth 48 lakh under a delivery challan with e-way bill for the purpose of job work from M/s Vijay Pvt. Ltd., a registered manufacturer in Haryana. The scope of job work included mounting the steel cabinets on a metal frame and sending back the mounted cabinets to Vijay Pvt. Ltd. The metal frames are to be supplied by M/s VRM Ltd. along with services relating to job work. VRM Ltd. has agreed to charge total consideration of 6.50 lakh for the entire mounting job work activity including the value of metal frames. During the course of mounting activity, metal waste is generated out of metal frames, which is sold by M/s VRM Ltd. for 52,000. VRM Ltd. sent back the steel cabinets mounted on the metal frame to Vijay Pvt. Ltd. on 13 th October, 2024 under a delivery challan with e-way bill. You are required to compute taxable value and the GST liability of M/s VRM Ltd. related to this transaction in any tax period. Assume GST rate for metal frame as 28%, for metal waste as 12% and for services as 18%. Also, give reason(s) for inclusion or exclusion of the value of cabinets in the job charges for the purpose of payment of GST by VRM Ltd.

Suggested Answer and Working Notes:

Particulars Amount 2 (₹) Rate GST (₹) Job charges [Since mounting steel cabinets on metal frames by a job worker is treated as a service (even though the metal frames are also supplied as a part of the mounting activity) in terms of Schedule II to the CGST Act, tax is payable @ 18%. Value of steel cabinets supplied by the principal will be excluded from the job charges since supply of cabinets does not fall within the scope of supply to be made by job worker M/s VRM Ltd.] 6,50,000 18% 1,17,000 Sale of metal waste [Since M/s VRM Ltd. is registered, the tax on the supply of metal waste being goods will be payable by it @ 12%.] 52,000 12% 6,240 Total taxable value and GST payable 7,02,000 1,23,240 2 It has been most logically assumed that amounts given are exclusive of GST. However, it is also possible to assume the amounts to be inclusive of GST and solve accordingly.

Topics: Job Work

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