Job Work Under GST means outsourcing of manufacturing activities for completion of a product beyond the premises of the principal manufacturer. Article discusses Meaning of Job work under GST, Documents for movement of inputs and Capital goods to Job worker, Principal and Job Worker concept, Books of Accounts to be maintained by Job Worker, Valuation, Levy and Collection of Tax on supply of services by Job worker, Input tax credit of input & capital goods sent for job work, Returns to be filed, E-Way Bill movement of goods for job work, Availability of input tax credit by the principal or job worker etc.
| GST Section 143 | Additions after GST Circular 38/2018 dated 26 March 2018 | |
| Introduction: — | Job work means outsourcing of manufacturing activities for completion of a product beyond the premises of the principal manufacturer. | |
| Meaning of Job work under GST | Section 2 (68) of CGST Act, 2017, “Job work” means any treatment or process undertaken by a person on goods belonging to another registered person and expression “job worker” shall be constructed accordingly | Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work. |
| How it Operates (Brief) | Registered person can send any inputs or capital goods, without payment of tax (subject to conditions), to a Job worker for job work and there subsequently send to another job worker and likewise.
The principal shall bring back the goods to his place of business or supply (including export) the same directly from the place of business / premises of the job worker within 1 or 3 year in case of inputs or capital goods respectively (these except moulds and dies, jigs and fixtures or tools) on payment of tax within India, or with or without payment of tax for export, as the case may be. |
The provisions of section 143 of the CGST Act are applicable to a registered person and it is only a registered person can send the goods for job work under said provisions. It is choice of registered person to avail or not to avail of the benefit of these special provisions of job work.
a job worker is required to take registration only in cases where his aggregate |
| turnover (to be computed on all India basis) in a financial year exceeds the threshold limit regardless of whether the principal and the job worker are located in the same State or in different States. Refer Notification 10/2017 where exempts Job Worker to register in case of inter-state Supply. | ||
| Documents for movement of inputs and Capital goods to Job worker: | Rule 55 (1) (c) of CGST Rules, 2017 provides that for the purpose of transportation of goods for job work, the principal manufacturer may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of invoice at the time of removal of goods for transportation, containing the following details, namely :-
(i) date and number of the delivery challan; (ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered; (iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if registered; (iv) HSN code & description of goods; (v) quantity ( or provisional quantity, where not known); (vi) taxable value; (vii) tax rate and tax amount — central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee; (viii) place of supply, in case of inter- State movement; and signature. (ix) In case of import of goods by the principal, after customs clearances of imported goods can be moved directly to premises of job worker with a copy of Bill of Entry and the principal shall issue challan under rule 45 of the CGST Rules directy to the job worker. |
Challan to be issued by Principal in triplicate; 2 copies to Job Worker alongwith Goods, out of these 2 copy 1 is to be returned along with the the processed goods when processed goods are sent back to Principal. u/s 143 it was mentioned Original for Consignee Duplicate for Transporter and Triplicate for Consignor
After completion of job work, if the piecemeal quantities are return by the job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker. |
| Points on joint reading post Notification | ||
| Principal and Job Worker concept:- | The registered person on whose goods (inputs or capital goods) job work is performed is called the “Principal” & the person who under takes to carry job working of another person is called “job worker” for section 143 of the CGST Act. | |
| Books of Accounts:- | Section 143(2) of CGST Act, prescribed that the responsibility for keeping proper accounts for the inputs or capital goods sent for job work lies with the principal. | |
| Additional Place of Business:- | Principal manufacturer has to declare the job worker premise as additional place of business. except (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. | |
| Valuation | The job worker has to issue an invoice for the value of his services i.e. for job work charges. As per section 15(2)(b) of the CGST Act, any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient will form part of the valuation for that supply, if it has not been included in the price of such supply. | |
| Moulds and Dies, Jigs and Fixtures, or Tools. | 1 year/3 years limit do not apply to these goods. These can be retained by Job Worker. Disposal of these goods as scrap will be liable to GST by Job Worker (if registered) otherwise principal liable to pay GST on sale of such scrap. | |
| Levy and Collection of Tax on supply of services by Job worker: | In case TO from Job Worker process crosses the threshold limit of Rs.20 la kh than the Job Worker is under obligation to get registered under GST & start levying GST at the applicable rates on all the job work charges. | |
| Input tax credit of input & capital goods sent for job work: | The principal is eligible for the ITC even in case directly sent to Job Worker; in case of Deemed Supply it will be considered as inputs/capital had been supplied by the principal to the Job Worker on the day when the said inputs were sent out. | |
| Returns | The inputs, semi — finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal for all cases (Refer rule 55 for Details in Challan).
The details of challans needs to be filed in FORM GST ITC-04 furnished within 25th of the month succeeding the said quarter. Where the inputs or capital goods are not returned within specified time the same shall be disclosed in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest. |
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| Supply of waste/scrap: | The waste and scrap generated during the job work may be supplied by the registered job worker directly from the place of business or by the principal if job worker is not registered under GST. GST liability follows accordingly on sale of Scrap / Waste | |
| Violation of conditions laid down in section 143: | If the inputs or capital goods are neither returned to the principal nor supplied from the job worker premises within the prescribed time limit the principal would issue an invoice for the same and pay GST and declare such supplies in the return of particular month. | |
| E-Way Bill movement of goods for job work : | An e-way bill is required to be generated by every registered person causes movement of goods of consignment value exceeding fifty thousand rupees. However, for inter-State movement of goods a-way bill shall be generated either the principal or by the registered job worker irrespective of the value of the consignment. | |
| Availability of input tax credit by the principal or job worker : | It is clarified that, in view of the provisions contained in clause (b) of sub-section (2) of section 16 of the CGST Act, the input tax credit would be available to the principal, irrespective of the fact whether the inputs or capital goods are received by the principal and then sent to the job worker’s place of business, without being brought to the premises of the principal. 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 under GST. | |
Author Bio
Sir,
Please correct the CGST Act instead of COST Act.