Article explains What is Job work, Whether Job worker should be registered under GST, ITC on goods sent for job work (Section 19), Documentation for removal of goods without payment of taxes, When goods are sent from one job worker to another job worker, Direct Dispatch of goods from job work premises and E-way bill generation for Goods sent for Job Work or Received after Job Work.
What is Job work?
As per section 2(68) of the CGST Act, 2017 job work is termed as “any treatment or process undertaken by a person on goods belonging to another registered person”. The person who does the job is termed as “Job worker”.
In simple words, Job worker is a person who carries out any treatment or process on inputs or capital goods being sent by Principal (Registered supplier whose is the owner of goods) for further processing. Example: Packaging
In case Job worker located within the same state-The Job worker is required to obtain registration only if his aggregate turnover to be computed on all India basis in an FY exceeds the specified threshold limit.
In case Job worker is located in different states-As per section 24(i) of the CGST Act registration is mandatory for suppliers making any interstate supplies. However, exemption has been granted in case of job worker if his aggregate turnover doesn’t exceed the threshold limit (Notification no. 10/2017 dated 13.10.2017)
Hence to summarise Job worker being the supplier of service is required to obtain registration only in cases where his aggregate turnover on all India basis doesn’t exceed the specified threshold limit regardless of the location of job worker.
Principal can take credit of input or capital goods sent to job worker whether from his own premises or from supplier of goods premises directly Subject to condition that he has received back Inputs within 1 year (extendable by another 1 year) and Capital goods within 3 years (extendable by another 2 years) from date of supply.
But these restrictions do not apply to moulds and dies, jigs and fixtures or tools sent out for job work.
Note: Date of Supply means
On failing to comply with the above timelines, goods will be deemed to have been supplied to the job worker on the day they were sent out.
The principal will be liable to pay tax along with applicable interest on such supply.
In case the job worker returns the goods after stipulated time it will be treated as a separate supply.
Whether goods are removed from principal premises or from Premises of supplier from whom goods have been purchased by the principal directly to Job worker premises principal needs to prepare
Challan issued by the principal may be endorsed by the job worker sending the goods to another job worker premises if quantity sent by Job worker 1 to Job worker 2 is the same as sent originally by the principal. But in case of quantity sent differs from originally sent by principal fresh challan is required to be issued by job worker 1 to Job worker 2.
After processing goods, the Principal has an option to Supply goods directly from job worker premises but the principal needs to declare Job worker premises as his additional place of business in registration. However such declaration will not be required if job worker is already registered.
Further, it is clarified that such supply will be regarded as supply by the principal and by the job worker. Thus the value of such goods supplied will be included in aggregate turnover of the principal and not job worker (Explanation (ii) to sec 22 of CGST Act, 2017)
In case goods being sent for Job work to another state, the e-way bill shall be generated either by the principal or registered job worker irrespective of the value of the consignment. If job worker is unregistered e-way bill needs to be generated by the principal itself.