In what could come as urgent relief for oil companies, revenue authorities have allowed refineries to pay GST only on value addition done by job workers against on the total valuation.
Many oil refineries outsource some of the processes to job workers. These refineries provide the raw material to the job worker and a final product is then delivered. There were concerns that the tax authorities would impose GST on the total valuation of the final product against value addition by the job worker.
The Kerala bench of Authority of Advance Ruling (AAR) on Friday ruled that the outsourced process be treated as job work.
“The controversy with respect to the scope of job work activities gets settled to a very large extent by this pragmatic ruling, which has clearly held that the activities done in this case for the refinery would fall within the purview of job work,” said Abhishek A Rastogi, partner, Khaitan and Co, which represented the oil refineries. Read More