Job work is a well-established norm where a large number of industries are dependent on outside support for completing their manufacturing activities. 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, intermediate process, assembly, packing or any other completion process or complete manufacturing.
Section 2(68) of the CGST Act provides that
“job work” means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression “job worker” shall be construed accordingly.
I wrote an article “Job Work Provisions Under GST” published in Taxguru on 23rd May’2017 where in complete details of Job Work under GST was explained. Now in this article let us discuss about E-Waybill Provisions for Job Work.
GST E-Way bill needs to be generated not only for the transport of goods on account of sales but also for any other reason like inter-branch transfer, purchase from an unregistered person and transfer on account of job work.
Here we shall discuss Four Scenarios :
1. Principal Sending the Goods to Job Worker
2. Goods Sent Directly to the Job Worker from Third Party
3. Goods Sent from one Job Worker to another
4. Goods Returned after Job Work
Principal Sending the Goods to Job Worker :
As per Rule 45 of CGST Rules : Conditions and restrictions in respect of inputs and capital goods sent to the job worker.-
(1) 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.
(2) The challan issued by the principal to the job worker shall contain the details specified in
Rule 55 (1)(b) of CGST Rules : Transportation of goods without issue of invoice.- For the purposes of transportation of goods for job work, the consigner (Principal) 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 details like date and number of the delivery challan; name, address and Goods and Services Tax Identification Number of the consigner; name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if registered; Harmonized System of Nomenclature code and description of goods; quantity (provisional, where the exact quantity being supplied is not known); taxable value; tax rate and tax amount; place of supply, in case of inter-State movement; and signature.
Rule 55 (2) of CGST Rules : The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely:–
(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.
Rule 138 of the CGST Rules, 2017 provides for the e-way bill mechanism and in this context it is important to note that “information is to be furnished prior to the commencement of movement of goods” and “is to be issued whether the movement is in relation to a supply or for reasons other than supply”.
Rule 138 of CGST Rules : Information to be furnished prior to commencement of movement of goods and generation of e-way bill.-
(1) Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees—
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person, shall, before commencement of such movement, furnish information relating to the said goods in Part A of FORM GST EWB-01, electronically, on the common portal.
Provided that where goods are sent by a principal located in one State to a job worker located in any other State, the e-way bill shall be generated by the principal irrespective of the value of the consignment
Note : The expression “for reasons other than supply” will include job work, removal for testing purpose, send on approval basis, Non-Taxable Supply etc.
In a nutshell from the above discussions it is very clear that :
1. The Principal sending Goods for Job Work may issue a Delivery Challan in Triplicate : Original for the Job Worker; Duplicate for Transporter & Triplicate to Retain with him as office copy.
2. The Principal to generate E- Waybill before commencement of such movement. E-Waybill is mandatory irrespective of the value of the consignment in case Inter-State Transaction.
Rule 138 of CGST Rules : (Notification No. 34/2017—Central tax dated 15.09.2017)
Where goods are sent by a principal located in one State to a job worker located in any other State, the e-way bill shall be generated by the principal irrespective of the value of the consignment
Goods Sent Directly to the Job Worker from Third Party:
Sec 19 (2) of CGST Act : Notwithstanding anything contained in clause (b) of sub-section (2) of section 16,
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.
That means the goods may be sent directly from the third party to the job worker. In such case the concept of “Bill to” and “Ship to” provisions shall be applied.
If the addresses involved in ‘Bill to’ and ‘Ship to’ in an invoice / bill belongs to different legal names/taxpayers, then two e-way bills have to be generated.
1. one e-way bill for the first invoice,
2. second e-way bill is from ‘Bill to’ party to ‘Ship to’ party based on the invoice / bill of the ‘Bill to’ party.
For example, A (a third party) has issued invoice to B (Pricipal) as ‘Bill to’ with C (Job Worker) as ‘Ship to’. Legally, both B and C are different taxpayers. Now, A will generate one e-way bill and B will issue Challan and generate one more e-way bill. As goods are moving from A to C directly, the transporter will produce both the invoice & Challan and e-way bills to show the shortcut movement of goods.
Goods Sent from one Job Worker to another
As per Sec 143. (1) of CGST Act, any inputs or capital goods, without payment of tax may be sent to a job worker for job work and from there subsequently send to another job worker and likewise.
As per Proviso to Sec 143. (1) of CGST Act, 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
That means the if the goods are sent from one Job Worker to another Job Worker, then the Job Worker who causes movement of goods (first / previous Job Worker) need to be registered or the Principal has to declare the place of business of the job worker as his additional place of business
In such cases if the Job Worker who causes movement of goods is registered, the job worker has to generate E-Way Bill otherwise the Principal has to generate E-Way Bill.
Goods Return after Job Work :
Here two Scenarios arise :
1. The Job Worker is Registered
2. The Job Worker is Un-Registered
The Job Worker is Registered :
If the Job Worker is Registered and Goods are returned back to the Principal then, the Job Worker (the movement is caused by Job Worker) has to generate E-Way Bill.
The Job Worker is Un-Registered
Second Proviso to Rule 138(3) : where the movement is caused by an unregistered person either in his own conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate the e-way bill in FORM GST EWB-01 on the common portal in the manner specified in this rule.
Explanation 1 to Rule 138(3) : where the goods are supplied by an unregistered supplier to a recipient who is registered, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of the movement of goods.
By combined reading of both, it is clear that in case the Job Worker is Un-Registered, then either the Principal or the Transporter may generate the E-Way Bill.
Value for the Purpose of E-Way Bill :
Job worker is required to raise an e-Way Bill on the basis of delivery challan and thus the value to be entered in Part-A of E-Way Bill shall be the value of goods returned and not the job work charges. However, he may send the invoice of job charges along with delivery challan and e-Way Bill. The value to be included in the E-way bill should be inclusive of the job work charges. That means the value should be original value of Goods plus job work charges.