As per clause (68)  of section 2 of the CGST Act, 2017,

“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 Procedure for Jobwork :

Section 143 of the CGST Act provides that the principal may send and/or bring back inputs/capital goods for job work without payment of tax, under intimation to the proper officer and subject to the prescribed conditions. Rule 45 of  the  CGST Rules provides that the inputs, semi-finished goods or capital  goods  being sent for job work (including  that being sent from one job worker to another job worker for further job work or those being sent directly to a job worker) shall be sent under the cover of a challan issued by the  principal, containing the details specified  in rule 55 of  the  CGST Rules.

Principal can send inputs or Capital Goods directly to the Job worker without bringing them to his premises and can still avail the credit of the tax paid on such Inputs or Capital goods. In  case  of  import  of  goods by the principal which are then supplied directly from the customs station of import, the goods may move from the customs station of import to the place of business/premises of the job worker with a copy of the Bill  of Entry and the principal shall issue the challan under rule 45 of the CGST Rules and send the same to the job worker directly

Time Limit for Bringing Back Input or Capital Goods meant for Jobwork

The Principal is required to bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year (for inputs) and three years(for capital goods), of their being sent out, to any of his place of business, without payment of tax.

The period of one year and three year may on sufficient cause being shown, be extended by the

Commissioner for a further period not exceeding one year and 2 year respectively

Section 143 of the  CGST Act provides that  the  principal may supply, from the place of premises of a job worker, inputs after completion of job work or otherwise or capital goods (other than moulds and dies, jigs and fixtures or tools) within one year or three years respectively of their being sent out, on payment of tax within India, or with or without payment of tax for exports, as  the  case  may  be. This facility is available to the principal only if  he declares the job worker’s place of business / premises as his additional place of business or if the job worker is registered. In case of exports directly from the job worker’s place of business/ premises, theLUT  or bond, as the case may be, shall be executed by the principal.

Since the supply is being made by the principal, it is clarified that the time, value and  place of  supply  would have to be determined in the  hands of the principal irrespective of the location of the job worker’s place of business/premises

Records to be maintained:

The responsibility of keeping proper accounts ofthe inputs and capital goods sent for job work lies with the Principal.

As per  Section 143 (5) of the CGST Act  provides that the  waste and  scrap  generated during the  job  work may be supplied by the registered job worker  directly from his place of business or by the principal  in  case the job worker is  not registered.

As per  the provisions contained in section 143 of the CGST Act, if the inputs or capital goods (other than moulds and dies, jigs and fixtures or tools) are neither received back by the principal nor supplied from the job worker’s place of business within the specified time period, the inputs or capital goods (other than moulds and dies, jigs and fixtures or tools)  would be deemed to have been supplied by the principal to the job worker on the day when such inputs or capital goods were sent out to the first job  worker.

Date of supply when the goods are not returned within stipulated time limit :

The date of supply shall be the date on which such inputs or capital goods were initially sent to the job worker and interest for the intervening period shall also be payable on the tax.

The details of Challan in respect of goods send to Jobworker or received back from a Job workers during a specified period shall be included in Form GST ITC 04 to be furnished for that period on or before 25^th day of the month succeeding the said period or within such time as extended by Commissioner by notification in this behalf.

Specified period: It shall mean period of Six Consecutive months commencing on the 1^st day of April and the 1^st day of October in respect of a principal whose aggregate turnover during the immediately preceding financial year exceeds Rs 5 crore and A financial year in any other case.

Rule 45 of the CGST Rules provides that  inputs, semifinished  goods or capital goods shall be sent to the job  worker under the cover of a challan issued by the principal, including in cases where such goods are sent directly to a job worker.

Further, rule  55 of the CGST Rules provides that  the consignor  may issue  a  delivery  challan containing the prescribed particulars in case of transportation of goods for job work. It may be noted that rule 45 provides for the issuance of a challan by the principal whereas rule 55 provides that the consignor may issue the delivery challan.

The third proviso to rule 138(1) of the CGST Rules provides that  the e-way bill shall be generated either by the principal or by the registered job worker irrespective of  the value of  the  consignment, where goods are sent  by a principal located in one State/ Union territory to a job worker located in any other State/ Union  territory.

Where the goods are sent from one Job worker to another Job worker, the Challan may be issued either by the Principal or the Job worker sending the goods to another Job worker.

Transitional Provision

As per provision of Section 141 of CGST Act 2017, where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of erstwhile law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within 6 months from the appointed day. However, the competent authority may extend the period on sufficient cause being shown for a further period of 2 months.

In case if the goods are not returned with the stipulated time period (including extended time limit) then the Input Tax Credit is liable to be reversed.

It is pertinent to note that Transitional Provision is applicable to Inputs and Semi Finished goods only.

 

A declaration in FORM GST TRAN-1 is to be submitted within 90 days of the appointed (further period not exceeding 90 days), specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by the job worker on the appointed day. The said details is to be furnished by both Principal Some of Important Question in Job work

• Does Input include Intermediate Goods ?

Yes, Input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or Jobworker. Such intermediate product can also be removed without the payment of tax.

• Whether the  job worker can use his own goods for providing the service of Job work and whether he is eligible for ITC in respect of inputs, etc. used by him in supplying job work services?

Yes. In addition to the goods received from the Principal, he can use his own goods for providing the service of job work. It is also clarified that the job worker is also eligible to avail ITC  on inputs, etc. used by him in supplying the job work services if he is registered.

• Whether it is violation of Section of 143 of CGTS Act, if moulds, Dies, Jigs, fixtures and tools are not brought within the time stipulated specified for Job work ?

No. The provision of returning the goods as stipulated in Section 143 of CGST Act is not

Job Work - Some Issues

applicable in case of moulds, dies, jigs, fixtures and tools.

• What’s the turnover limit applicable to Job worker for obtaining registration under GST ?

The  job  worker is required to obtain  registration only if  his aggregate  turnover, to be computed on all India basis, in a financial  year exceeds  the specified  threshold limit (i.e.  Rs 20 lakhs or  Rs. 10 lakhs in case of special category States except Jammu & Kashmir).

• Can department question on the Quantum of Scrap generated at Job workers premises?

The department cannot ask for GST on higher value of scrap provided that principal is not allowing scrap more than what is generated.Pearl soap & Co.187 ELT 460 CESTAT Mumbai. The Principal should maintain records of the scrap generated on the premises of Job worker

• Can Principal avail ITC if the Input or Capital goods  are send directly to the premises of Job worker ?

As per Section 19(2) and Section 19(5) of CGST Act, 2017, ITC can be availed by the principal even if such inputs / capital goods are not being first received by the principal and are directly sent to the job worker.

• In case goods are not returned in prescribed period and treated as deemed supply as per section19(3) then question arises as to whether the job worker is eligible for availing credit of the GST paid by the principal by considering the same as deemed supply as per Section 19 (3) of the CGST Act, 2017.

Ans: Where goods are not returned in prescribed period, the principal has to issue invoice and declare such supplies in his return for that particular month in which the time period of one year / three years has expired. The date of supply shall be the date on which such inputs or capital goods were initially sent to the job worker.

Since date of invoice will be of current period, the job worker is eligible to avail the credit of the same. Moreover, as per second proviso to section 16

(2) of the CGST Act, 2017 the job worker has to pay the said amount to the principal. The same may be done by way of making payment in cash or returning the said goods as supply of the job worker. For this, the job worker has to raise his own tax invoice stating principal as buyer.

• What will be the transaction value if due to some dispute between Principal and Job worker, goods are not returned by the Job worker ?

Ans) It is a well settled position in earlier laws that the valuation for the same goods should be considered transaction value by the job worker and not market value of the said goods by the principal. The same was decided by Hon’ble Supreme Court in the case of Pawan Biscuits & Co. [2000 (120) ELT (24)].

• Is Principal required to declare Job workers Place as Additional Place of Business

The principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case -

• where the job worker is registered under section 25; or
• where the principal is engaged in the supply of such goods as may be notified by the Commissioner.

10 ) If goods meant to be sent out for Job work are lost in transit, whether the principal is required to reverse credit under section 17(5)(h) or it will be deemed supply as per section 19(3) ?

Ans) Since goods are lost or destroyed, section 17(5) (h) will be applicable and the principal is required to reverse the credit on inputs or capital goods, and it will not be treated as deemed supply.

Ans) The supply of goods (after completion of job work) by a registered job worker shall be treated as the supply of goods by the principal and the value of such goods shall not be included in the aggregate turnover of the registered job worker.

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