Job work

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CA. Mala Rohara (Querist)
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19 May 2017 ours is soya oil co. we hv taken job work from other co. As per job work contract that co giving us crude oil which will be refined by our co as job work basis. in refining process refined oil is 97, 2 by products, 1 normal loss. But as per job work contract we wil be supplying them 100 refined oil. That means 3 oil would be supplied from our stock and no by products will be given to them.In that wat taxation effects would be?Will extra 3 oil from our stock be taxable under sales tax and wat taxation would be on by products which are not return to them

CA Mohit Kumar

CA Mohit Kumar (Expert)
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20 May 2017 when you supply goods out of your pocket. you have to pay VAT because you are providing from your input purchases on which you already taken credit... and on by products if you sale ,VAT will be paid...

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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20 May 2017 you have to see the contract arrangement and see about the yield mentioned and if it is mentioned that it is 97 and in return for extra 3 you will have by-product then this is sale (barter) which will be taxable under sales tax further by-product sale will also be taxable

and if the arrangement provides that the oil has to be processed and to be given back with 100% yield
then the extra 3 will be part of cost and by-product would only be considered as sale

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