Hello Friends, In this article we will discuss about job work and its impact on Principal and job worker. As per sec 2(68) of CGST Act “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression of “Job Worker” would be construed accordingly. In this article we will discuss all the relevant topics like
- Input tax credit
- Procedure of job work
- Condition and restrictions
- Stock declaration
- E-Way bill rule for job work
- Transition provision
- As per Sec 19(1) of CGST Act the principal shall claim the “input tax credit” on input sent to job worker for job work subject to certain conditions and restriction provided in rule 45 of CGST Rules.
- If inputs are directly sent to the job worker for job work without being first brought to his “Place of business” then also Principal is entitled to claim input tax credit as per 19(2).
- Where the input sent for job work are not received back by the “Principal” after completion of job work or otherwise or are not sent according to sec 143 within one year of being sent out it shall deemed that such input had been supplied by the principal to the job worker on the day when the input was sent to job worker. However if inputs are sent directly to a job worker, the period of one shall be counted from the “Date of receipt of inputs” by the job worker.
- As per 19(4) principal is allowed to claim input tax credit on “Capital Goods” subject to certain conditions and restrictions prescribed in rule 45 of CGST Rules.
- Principal are allowed to claim input tax credit like allowed in case of input, when directly sent to job worker for job work without being first brought to his place of business.
- Where the capital goods sent for job work are not received back by the principal within a period of “Three Years” of being sent out, then 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. However in case of direct transfer to job worker the period of three years would be counted from the date job worker has received the Capital goods.
- However the term of “One year” or “Three Years” would not apply in case of Moulds and Dies, Jigs and fixture or tools sent out to a job worker for job work.
Procedure of “Job work” as per CGST Act:-
- As per sec 143(1) of CGST Act, if a registered person referred here as principal may under intimation and subject to such conditions as may be prescribed may send inputs, capital goods without payment of taxes to a job worker for job work and can be sent subsequently further to other job worker for further job work. And job worker shall:-
- Bring back inputs, capital goods after completion of job work or otherwise within one year or three years respectively other than moulds and dies , jigs and fixtures, or tools of they are being sent to any of place of business of principal.
- 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. In case are supplied in India on payment of tax or are supplied through export, with or without payment of tax.
- Principal can not directly supply goods directly from place of business of a “Job worker” unless the principal declares that place of business of job worker as his additional place of business. Exceptions in case job worker is registered under sec 25 or in case principal is engaged in supply of goods notified by “Commissioner”.
- Proper books of accounts for capital goods or inputs are to be maintained by principal
Conditions and restriction to be followed:-
As per Rule 45 of CGST Rules,2017 conditions and restrictions to be followed by “Principal” are given below:-
- 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, including where such goods are sent directly to a job worker.
- Where the goods are sent from one job worker to another job worker, the challan can be issued by job worker sending the goods to another job worker or principal.
- The challan issued by the “Principal” may be endorsed by the job worker indicating the description and quantity of input or capital goods sent further or are returned to principal. This provision has been laid down to check exact quantity of goods sent to another job worker as there are possibility of wastage or are sent back to principal. So endorsement of challan by job worker is required
- The challan endorsed by job worker may be further endorsed by another job worker.
- Challan issued by the “Principal” to the job worker should contain the details specified as per rule 55.
- “FORM GST ITC-04” has to be furnished showing the details of challan in respect of goods dispatched to a job worker or received from a job worker or sent to another job worker during a “Quarter” shall be included in FORM GST ITC-04 furnished for that period on or before “Twenty-Fifth” day of the month succeeding the quarter or such further period as may be notified by the Commissioner of state by a notification.
- Where the input of capital goods are not returned to the principal within the time stipulated in sec 143 then it shall be deemed that such inputs or capital goods had been supplied by principal to job worker as on date when the input or capital goods were sent out to Job worker. So GST has to be paid with interest by the principal.
Declaration of Stock held by a principal and job worker:-
As per rule 119 of CGST Rules every person to whom the provisions of section 141 apply shall, within [the period specified in rule 117 or such further period as extended by the Commissioner],submit a declaration electronically in FORM GST TRAN-1, specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by him on the appointed day.
E-WAYS BILL RULE FOR JOB WORK:-
As per rule 138 OF CGST Rules, Where goods are sent by principal located in one state or Union territory to a job worker located in any other state or Union territory, the E-way bill shall be generated either by the “Principal” or the “Job worker”, if registered, irrespective of the value of consignment
Transitional Provision relating to Job work:-
Transition provision are provided in sec 141 of CGST Act 2017, however these are irrelevant as total of six months and In special case two months extension to be provided by commissioner on sufficient cause from appointed date has already been elapsed.
Author Bio
Sir
Kindly clarify if gst applies on a job work. It is mentioned in above article that job work can be sent to the job worker w/o payment of tax. Does it mean that job work does not attract gst.
Pl clarify.