QUESTION
We send material for processing like powder coating, our supplier use some material like powder, paint etc. for such process which is taxable @ 18% GST. Now our query is whether our supplier has to raise Invoice as Job Work with new GST @ 12% or raise invoice as material and job work supply @ 18%?

ANSWER
Facts of the case:
Rate of tax applicable on Job work.

Law Applicable:
The definition of Job Work is given in Section 2(68) of CGST Act as follows:
(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;

The term manufacture is defined in Section 2(72) of CGST Act as follows:

(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;

Composite supply is defined as:

(30) 'composite supply' means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Interpretation:
On the basis of above definitions and reading of amended Notification:

CASE 1: If there is no change in the item send for Job Work, only some properties are changed like the material is send for paint, polish, grinding, turning, boring etc where the basic item is not changed like Auto components are send and same is received back after the process, then the rate of tax will be 12%.

CASE 2: When the input is sent for process but after Job Work its shape is changed and a new product has emerged like Zinc, aluminum, steel is sent for casting or forging and a new product has emerged then the rate of tax as per entry 26(iv) of Notification no. 11/2017 Central Tax (Rate) will be 18%.

It is to be noted that if some inputs are used by job worker in providing the service of Job work then it will be considered as Composite supply where principal supply is that of Job work, therefore rate of tax of Principal supply is applicable i.e. of job work.

Conclusion :
Thus In cases even if the Job worker is using some consumables or inputs for doing Job Work. Please be noted that this will not have any effect on Rate of tax. The Rate of tax will be decided on the basis of above 2 criteria.