Job-workers are playing a major part in Indian economy due to involvement in the processing of input or unfinished goods. GST makes the Principal Manufacturer (the owner of the goods) to take care about compliance on behalf of the job-worker, considering the fact that Job-work is often a MSME sector and the same not able to comply with the structure of tax. Section 143 provides for a special procedure to exempt supplies from payment of GST by principal manufacturer to job worker and return from job worker to principal subject to certain conditions and procedure.

  • Definition of Job Work

According to Section 2(68) of CGST Act, 2017, ‘job work’ means a person undertaking any treatment or processing of goods belonging to another registered person.  Any person who does such job work will be considered as “Job worker”. As per the Section 2(68) the Job worker may or may not be registered but the principal should be registered.

The definition of job work contains 3 important phrases, namely:

Treatment or Process

The term treatment or process is very subjective. There is no mention here that whether the result of the treatment or process must be manufacture and the emergence of a distinct new product. This implies that whether or not the treatment or process results in manufacture, the treatment or process will always be treated as a supply of services the classification will continue to be HSN 9988.

Goods belonging to another person

Whether 100% of the goods required for the treatment or process must necessarily be provided by the principal manufacturer?? What if non-essential or ancillary goods alone are provided by the principal manufacturer and attempt to operate under the job work model??

A reasonable approach demands that at least the primary material must be provided by the principal manufacturer where the intention is to secure the services offered by the job worker. The transaction would not fail to be a job work with the job worker adds his own material, whether secondary or ancillary, but in addition to the primary material provided by the principal manufacturer.

And a case where all goods other than the primary material are provided by the principal, care needs to be taken in making the decision as to whether it qualifies for the job work or not.

Such person being a registered person 

This is very interesting that unless the principal is himself registered, the entire transaction will fail to be job work. In other words, job work will be job work only if the principal is registered and if the principal is unregistered then, job work will merely be work and the classification available for job work under HSN 9988 will not be available and other classification as appropriate to the processed goods will need to be followed.

Principal is responsible for accountability of Input/capital goods under Section 143(2) of the CGST Act. The Principal issues the challan (as specified in rule 10 of invoices rules under GST) to the job-worker for the inputs or capital goods. He maintains the accounts of input and capital goods.

  • Supply of Goods from the premises of Job worker

Goods are permitted to be supplied from place of business of job worker provided that Principal declares the place of business of job worker as his ‘additional place of business’ except

  • Job worker is registered u/s. 25.
  • Principal is engaged in supply of such goods as may be notified by commissioner in this behalf.

It also provides that the inputs or capital goods can be sent from one job worker to another job worker as well without payment of any tax on such goods being sent.

  • Inputs/Capital Goods sent to Job Worker not received back

If Inputs sent for job-work are not received back by principal within 1 year from date of sending, it shall be deemed that such inputs were supplied by principal to job-worker on the day when such inputs were sent out. (Should be at the end of 1 year)

If Capital goods sent for job-work are not received back by principal within 3 years from date of sending, it shall be deemed that such Capital were supplied by principal to job-worker on the day when such capital goods were sent out. (Should be at the end of 3 year)


In the gamut of GST, professional excellence of would surely pave the way for optimum realisation of opportunities while remarkably tackling the challenges of this momentous reform of indirect taxation system of the country. There are number of forms, returns and formalities under GST and every small businesses needs professional consultant.

Author Bio

Qualification: CS
Company: DVG & Associates
Location: Mumbai, Maharashtra, IN
Member Since: 02 Feb 2018 | Total Posts: 44
CS Dhaval Gusani is a founder of DVG & Associates, Company Secretaries and Corporate Law Professionals. He is a Commerce Graduate and an Associate Member of the Institute of Company Secretaries of India (ICSI). He has cumulative experience of more than 3 years with Listed Company, Chartered Acco View Full Profile

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