Job Work under GST – Detailed Analysis

The term ‘Job Work’ is very important subject under the GST. Though there is no tax under GST upon goods supplied for the purpose of job work to the Job Worker and returned back from the Job Worker after completion of job work to the Principal even then the Legislature has framed full fledged provisions under the GST Law in regard of transactions happened between the Principal and Job Worker.

Section 2 (68) of the CGST Act defines Job Work as “”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.”

Section 143 read with rule 45 of the CGST Act explain to follow the procedures for the purpose of job work transactions.

The Procedures are explained as under:

A. Applicability of the Provisions Relating to Job Work

1. Section 143 is applicable only to the Registered Person. It means liability to follow the procedures as envisaged under Section 143 is upon the Registered Person. The person other than registered person shall have no concern about this section.

2. Section 143 is applicable only to Taxable Goods. It is not applicable to the goods exempted from GST Tax or the Taxable Goods are sent to the Job Worker with payment of tax.

3. Inputs, semi-finished goods or capital goods may be sent to the Job Worker.

B. Legal Documents for goods sent to the Job Worker, goods sent to another Job Worker and goods returned to the Principal

1. Goods shall be sent to the Job Worker through a challan.

2. Challan shall also be issued by the Principal on such goods which shall have been sent directly to the Job Worker.

3. 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.

4. While returning the goods to the Principal by the Job Worker or goods sent to another Job Worker by the Job Worker, the challan issued by the principal may be endorsed by the job worker, indicating therein the quantity and description of goods.

5. In case the goods after carrying out the job work are sent in piecemeal quantities by a 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.

6. Challan shall be issued according to the provisions of rule 55 of the CGST Act. Rule 55 (2) requires to prepare the challan in triplicate. The copies of challan shall be marked as:

(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;

(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and

(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.

C. E-Way Bill requirements

1. E-Way Bill is required to be generated before movement of goods by the Principal to the Job Worker or by the registered Job Worker to the Principal or to the another Job Worker.

2. There is no limit in regard of value of consignment of such goods for generating e-way bill for goods sent for job work. For example if the consignment of such goods is Rs.1000 or less, e-way bill shall be generated.

D. GST Return for goods supplied for Job Work

1. Section 143 requires from the Principal to intimate each supply made to Job Worker, supply made to another Job Worker and goods returned by Job Worker to the Principal. The responsibility for keeping proper accounts for the inputs or capital goods sent to the Job Worker and the same returned back from the Job Worker or supplied made from the place of Job Worker shall be lie with the principal.

2. Such intimation is to be furnished in GST Return Form ITC-04.

3. Rule 45(3) of the CGST Rules provides that the principal is required to furnish the details of challans in respect of goods sent to a job worker or received from a job worker or sent from one job worker to another job worker during a quarter in FORM GST ITC-04 by the 25th day of the month succeeding the quarter or within such period as may be extended by the Commissioner. It is the responsibility of the principal to include the details of all the challans relating to goods sent by him to one or more job worker or from one job worker to another and its return therefrom.

E. Time Period for Inputs or Capital Goods to be brought back from the Job Worker

The Principal shall 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;

OR

The Principal shall 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.

Conditions for Supply from the Place of Job Worker

The Principal shall declare the place of business of the job worker as his additional place of business if the Job Worker is unregistered. Such declaration is not required if 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.

Such declaration for additional place of business may be given if the Job Worker is in the same state. But if the Job Worker is in other state then such declaration shall not be allowed.

Time Period may be extended by the Commissioner

The period of one year and three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively.

F. Implications for not received back from the place of Job Worker of Inputs or Capital Goods – Section 143 (3) and Section 143 (4)

1. Where the inputs and capital goods 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 within a period of one year or within a period of three years as the case may be of their being sent      out, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out.

For example – The Principal sent inputs to the job worker on 14-04-2018. If the inputs are not received back by 13-04-2019 then it shall be deemed that such     inputs had been supplied by the principal to the Job Worker on 14-04-2018 when     the inputs were sent out. Such supply shall be taken by the principal in the GST Return of April 2019. The Principal shall make payment of output tax with interest from the due date of payment of tax for return to be filed for the month of April 2018 till date of payment of output tax.

2. If such goods are returned by the job worker after the stipulated time period, the same would be treated as a supply by the job worker to the principal and the job worker would be liable to pay GST if he is liable for registration in accordance with the provisions contained in the CGST Act.

G. Waste and Scrap generated during the Job Work

Section 143 (5) – Any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered. But if the job worker is not registered then such waste and scrap shall be supplied by the Principal.

H. GST Rate on Job Work Services

Rate Chart according to Notification No. 11/2017 – Central Tax (Rate) at serial no.26 Heading 9988 ( Manufacturing services on physical inputs (goods) owned by others ) is reproduced as under:

Description of Service	Rate (per cent)
(i) Services by way of job work in relation to— (a) printing of newspapers; (b) textiles and textile products falling under Chapters 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); (c) all products other than diamonds falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (d) printing of books (including Braille books), journals and periodicals; (da) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5 per cent or Nil; (e) processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) respectively; (f) all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); (g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), except dog and cat food put up for retail sale falling under tariff item 2309 10 00 of the said Chapter; (h) manufacture of clay bricks falling under tariff item 6901 00 10 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (i) manufacture of handicraft goods. Explanation.—The expression “handicraft goods” shall have the same meaning as assigned to it in the notification No. 32/2017 -Central Tax, dated the 15th September, 2017 published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide number G.S.R. 1158(E), dated the 15th September, 2017 as amended from time to time.	2.5
(ia) Services by way of job work in relation to—  (a) manufacture of umbrella; (b) printing of all goods falling under Chapter 48 or 49,   which attract CGST @ 6 per cent	6
(ib) Services by way of job work in relation to diamonds falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);	0.75
(ic) Services by way of job work in relation to bus body  building; Explanation – For the purposes of this entry, the term “bus body building” shall include building of body on chassis of any vehicle falling under chapter 87 in the First Schedule to the Customs Tariff Act, 1975.	9
(id) Services by way of job work other than (i), (ia), (ib) and (ic) above;	6
(ii) Services by way of any treatment or process on goods belonging to another person, in relation to— (a) printing of newspapers; (b) printing of books (including Braille books), journals and periodicals. (c) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5 per cent or Nil.	2.5
(iia) Services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6 per cent.	6
(iii) Tailoring services	2.5
( iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), 2[(ib), (ic), (id),] (ii), (iia) and (iii) above.	9

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