Section 2 (68)of  CGST Act 2017 – Definition of Job Work “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.

So Job work means doing any treatment or process by a person on goods belonging to another registered taxable person. The one who is treating or processing such goods on behalf of principal is called Job-worker

Registration of Job worker under GST : The job worker would be required to obtain registration as per GST Provisions if his turnover exceeds prescribed threshold limit.

Explanation (ii) to Section 22 0f CGST ACT 2017

the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker;

Procedure for Job work under GST:- Section 143 of CGST Act 2017 dealt with Job work procedure. Following facilities with conditions are offered in relations to the Job work :-

A registered person (principal) can send inputs/capital goods  subject to certain conditions without payment of tax, to a job worker for job work and from there  bring back or send to another job worker and likewise,

The principal needs to declare the job worker place of business as additional place of business if the job worker is not registered under sec 25.

As per section 19 (2) Principal can send goods directly to the Job worker without bringing them to his premises and can avail credit of tax paid on such supplies.

Such inputs or capital goods sent to a job worker needs to be returned back within 1 and 3 year respectively or being sent out on payment of tax within India or with or without payment of tax for export as the case may be.

Intimation to the Jurisdictional officer by the principal is required, before supply of goods to job-worker. Intimation should contain the details of description of inputs intended to be sent by the principal and the nature of processing to be carried out.

The said intimation shall also contain the details of another job-worker, if any.

The inputs or capital goods shall be sent to the job worker under the cover of a challan issued by the principal. The challan shall be issued even for the inputs or capital goods sent directly to the job worker.The challan shall contain the details specified in rule 10 of the Invoice Rules. 

The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal. 

ITC on goods supplied to job worker under GST

As per Section 19 of the CGST Act, 2017 the principal shall be entitled to take the credit of input tax paid on inputs sent to the job- worker for the job work. Further, it provides that the principal can take the credit even when the goods have been directly supplied to the job-worker without bringing into the premise of the principal. The principal need not wait till the inputs are first brought to his place of business. 

Time Limits for return of goods under GST

As per section 19 of the CGST Act, 2017, inputs and capital goods after processing shall be returned back to principal within one year or three years respectively. This provision of return of goods is not applicable in case of moulds and dies, jigs and fixtures or tools supplied. 

Intermediate product

As per section 143 of the CGST Act, 2017, if certain process is carried out on the input before removal of the same to the job worker, such product after carrying out the process to be referred as the intermediate product. Such intermediate product can also be removed without the payment of tax. Therefore, both input and intermediate product can be cleared without payment of duty to job-worker. 

Waste provisions

Section 143 (5) of the CGST Act, 2017 provides that waste generated at the premises of the job-worker may be supplied directly by the registered job-worker from his place of business on payment of tax or may be cleared by the principal, in case the job-worker is not registered.

 Transitional provisions: Inputs as such or intermediate product which are sent to a job worker prior to 1st July 2017, under the provisions of existing law [Central Excise] and if such goods are returned within 6 months from the appointed day i.e. 1st July, 2017 no tax would be payable. If such goods are not returned within prescribed time, the input tax credit availed on such goods will be liable to be recovered.

If manufactured goods are removed, prior to the appointed date, without payment of duty for testing or any other process which does not amount to manufacture, and such goods are returned within 6 months from the appointed date, no tax will be payable. The manufacturer and the job worker are required to declare the details of such goods sent/received for job work in prescribed format GST TRAN-1.

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June 2021