Another important concept under GST is ‘Job Worker’. In this write- up, all provisions related to ‘Job Worker’ are being covered. Before moving further, let’s first understand what does job- worker means??
As per Section 2(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.
In other words, Job work is the processing or working on goods supplied by another person/ entity to complete a part or whole of the process. Job work can be undertaken for the initial process, assembly, packing or any other completion process or complete manufacturing.
Aspects related with Job Worker
Taking Input tax credit in respect of inputs and capital goods sent for job work
The Principal shall be allowed to take input tax credit on inputs sent to a job worker for job work.
In case of Inputs
The principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business.
If inputs not received within 1 year, treated as supply- NO ITC
If the inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.
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Section 143 (1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall, (a) 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 and three years, respectively, of their being sent out, to any of his place of business, without payment of tax; (b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be: Provided that 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— (i) where the job worker is registered under section 25; or (ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner. |
If inputs sent directly to a Job worker
If the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker.
In case of Capital Goods
The principal shall be allowed input tax credit on capital goods sent to a job worker for job work, even if the capital goods are directly sent to a job worker for job work without being first brought to his place of business.
If Capital Goods not received within 3 year, treated as supply- NO ITC
If the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.
If Capital Goods sent directly to a Job worker
If the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.
| Provisions related to Job worker shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work. |
Transition Provisions relating to Job Worker
In case of Inputs
If inputs removed for job work and return on or after the appointed day
If 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 existing 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 six* months from the appointed day.
| *If the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months. |
Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
In case of Semi- finished goods
Semi- finished goods removed for job work and returned on or after the appointed day
If any semi-finished goods had been removed from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the appointed day and such goods (hereafter in this section referred to as “the said goods”) are returned to the said place on or after the appointed day, no tax shall be payable, if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six* months from the appointed day.
| *If the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months. |
Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
In case of Finished goods
Finished goods removed for carrying out certain processes and returned on or after the appointed day.
If any excisable goods manufactured at a place of business had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the appointed day and such goods, are returned to the said place on or after the appointed day, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to the said place within six* months from the appointed day.
| *If the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months. |
Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
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Section 142(8)(a) where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. |
Every Person to whom the above provisions apply, within 60 days of the appointed day, submit an application electronically in FORM GST TRAN-1, specifying therein, the stock or, as the case may be, capital goods held by him on the appointed day details of stock or, as the case may be, capital goods held by him as a principal at the place/ places of business of his agents/ branch, separately agent- wise/ branch wise.
Note:
CGST stands for Central Goods and Services Tax
SGST stands for State Goods and Services Tax
UTGST stands for Union Territory Goods and Services Tax
IGST stands for Integrated Goods and Services Tax
Cess stands for Goods and Services Tax (Compensation to States)
Hope this information will help you in your Professional endeavors. For further assistance/query, feel free to write to us.
Author: C S Ekta Maheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at csektamaheshwari14@gmail.com
Disclaimer:
The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.
What is Composition Scheme Under GST
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-Further i want to inform you that form GST ITC-04 is not for transition, it will be applicable after transition means under GST
-Details of stock during transition period should be fill in Form GST Tran-1 as per Transition Rules (Rule 2)
Dear Ekta mam
Your article is too good
I have a question
Q. During transition period Goods with Job worker, no tax liability only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed
What if job worker is not registered as in that case job worker is not liable to declare any details of goods ?–
Will same be consider as job work, in case who store goods into his warehouse or cold storage of anothe registered person .
Or
Goods sent by a company to third party cold storage subject to gst or not?
What will be value in case of Material/Capital Goods sent to Job-worker and return back from job-worker considering GST? Can you please elaborate with one example in case of Inputs and Capital Goods?