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grant of tenancy rights in a residential dwelling for use as residence dwelling against 16. Para 4- Transfer of Business Assets
tenancy premium or periodic rent or both is exempt. Consequently, monthly rent ` CCP 02.16.41.00
CH 2 1,00,000 received by Mr. Happy from Mr. Serene is exempt.
Mr Raju & Mr Aditya are running a partnership firm and having goods S & T in
stock. They decide to dissolve the partnership and the goods S & T are taken over
Charge of Tax & Concept of Supply
CCP 02.15.40.00 by Mr Raju & Mr Aditya respectively. The business is not continued further.
Nandeeshwar Manufacturers sends certain category of yarn for processing to the Whether such takeover of stock be considered as supply?

job worker. The job worker undertakes the processing work on the yarn as per the Answer: As per clause 4(c) of Schedule II of CGST Act , the clause provides that
requirement of Nandeeshwar Manufacturers. During the process, the job worker where any person ceases to be a taxable person, any goods forming a part of asset of
uses his own material also. any business shall be deemed to be supplied by him in the course or furtherance of
The processed yarn is sold by Nandeeshwar Manufacturers directly from business.
the job worker premises. Balance quantity of yarn and waste material is sent Provided that it shall not be treated as supply if it falls under the following exceptions:

back by the job worker to Nandeeshwar Manufacturers. I) the business is transferred as a going concern to another person or
The job worker is of the opinion that he is using his own material also in ii) the business is carried on by a personal representative who is deemed to be a
the processing and hence the supply to Nandeeshwar Manufacturers is in the taxable person
nature of supply of goods as well as services. Do you agree with the opinion of job In both the above cases, the business is continued. Therefore, it will not be
worker?[ICAI Material] considered as supply of goods.
Answer- No, the opinion of the job worker is not fully correct. Section 7(1A) provides In the given case partnership firm is dissolved & ceases to be taxable person

that when certain activities or transactions constitute a supply in accordance with the also, the business is not continued further hence stock of S & T is to be treated as
provisions of section 7(1), they shall be treated either as a supply of goods or supply of supply & liable to GST.
services as referred to in Schedule II of the CGST Act.
Author Note:- Role of schedule II is only classification of activities or transaction
Any processing activity carried on any other person’s goods is treated as supply
as supply. Thus only if it is treated as supply as per sec 7(1) of CGST act this
of service in terms of Schedule II.
clause is to be referred for classification purpose.
The job worker, in addition to the goods received from the principal, can use his
Thus as per the aforesaid provision the activity is not a supply as per sec 7(1) & it
own goods for providing the services of job work. These goods are not supply per se, but
is a matter of doubt on applicability of clause (d).
being used in the processing activity carried out by it.
However, for exam purpose students shall follow above answer only till further any
Thus, the activity undertaken by the job worker, in the given case, squarely falls within
clarification is issued for this situation / activity
the purview of Schedule II and shall be considered as supply of service by the job worker
to Nandeeshwar Manufacturers.

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