Article explains what is Job Work Under GST, Procedural aspects of Job Work under GST, Who Is Principal For The Purpose Of Job Work Under GST?, Meaning Of Input Under GST, Meaning Of Capital Goods Under GST, Procedural Aspect Of Job Work Under GST, Conditions In Respect Of Inputs And Capital Goods Sent To The Job Worker Under GST, Deemed Supply For Job Work Under GST, Taking Input Tax Credit In Respect Of Inputs And Capital Goods Sent For Job Work And Waste Clearing Provision Under GST.
INTRODUCTION
The concept of job-work already exists in Central Excise, wherein a principal manufacturer can send inputs or semi-finished goods to a job worker for further processing. Many facilities, procedural concessions have been given to the job workers as well as the principal supplier who sends goods for job-work. The whole idea is to make the principal responsible for meeting compliances on behalf of the job-worker on the goods processed by him (job-worker).
The GST Act makes special provisions about removal of goods for job-work and receiving back the goods after processing from the job-worker without the payment of GST.
WHAT IS JOB WORK UNDER GST?
Section 2(68) of the CGST Act, 2017 defines job-work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘job worker’. The ownership of the goods does not transfer to the job-worker, but it rests with the principal. The job worker is required to carry out the process specified by the principal on the goods.
WHO IS PRINCIPAL FOR THE PURPOSE OF JOB WORK UNDER GST?
Section 143 of CGST Act 2017, A registered person may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods without payment of tax to a job worker for job work and from where subsequently send to another job worker.
MEANING OF INPUT UNDER GST
Input (sec 2(59) CGST Act, 2017 means any goods other than capital goods used or intended to be used by a supplier in the course and furtherance of business.
MEANING OF CAPITAL GOODS UNDER GST
Capital Goods (sec 2(19) CGST Act, 2017 means the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of the business.
PROCEDURAL ASPECT OF JOB WORK UNDER GST
Certain facilities with certain conditions are offered in relation to job-work, some of which are as under:
a) A registered person (Principal) can send inputs/capital goods under intimation and subject to certain conditions without payment of tax to a job-worker and from there to another job-worker and after completion of job-work bring back such goods without payment of tax. The principal is not required to reverse the ITC availed on inputs or capital goods dispatched to job-worker.
b) Principal can send inputs or capital goods directly to the job-worker without bringing them to his premises and can still avail the credit of tax paid on such inputs or capital goods. However, inputs and/or capital goods sent to a job worker are required to be returned to the principal within 1 year and 3 years, respectively, from the date of sending such goods to the job-worker.
c) After processing of goods, the job-worker may clear the goods to-
(i) Another job-worker for further processing
(ii) Dispatch the goods to any of the place of business of the principal without payment of tax
(iii) Remove the goods on payment of tax within India or without payment of tax for export outside India on fulfilment of conditions.
The facility of supply of goods by the principal to the third party directly from the premises of the job worker on payment of tax in India and likewise with or without payment of tax for export may be availed by the principal on declaring premise of the job-worker as his additional place of business in registration.
In case the job-worker is a registered person under GST, even declaring the premises of the job-worker as additional place of business is not required.
Before supply of goods to the job-worker, the principal would be required to intimate the Jurisdictional Officer containing the details of the description of inputs intended to be sent by the principal and the nature of processing to be carried out by the job-worker. The said intimation shall also contain the details of the other job-workers, 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.
CONDITIONS IN RESPECT OF INPUTS AND CAPITAL GOODS SENT TO THE JOB WORKER UNDER GST
(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.
Rule 55. Transportation of goods without issue of invoice. –
(1) For the purposes of
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known,
(b) transportation of goods for job work,
(c) transportation of goods for reasons other than by way of supply, or
(d) such other supplies as may be notified by the Board,
(PROCEDURE ABOUT THE DELIVERY CHALLAN ISSUED BY PRINCIPAL WHEN GOODS SEND TO JOB WORKER)
(1) 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 following details, namely:-
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if registered;
(iv) Harmonized System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known)
(vi) taxable value
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature.
(2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely: –
(a) original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) triplicate copy being marked as TRIPLICATE FOR CONSIGNER.
(3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared as specified in rule 138.
(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax invoice after delivery of goods.
(5) Where the goods are being transported in a semi knocked down or completely knocked down condition –
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice;
(c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment.
ITC 04
The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding the said quarter. (25th end of the quarter)
Manufacturer need to declare the details in ITC 04 in either or all the situations.
a) If the manufacturer is sending any input or capital goods to job worker
b) Job worker sends back the goods to the manufacturer
c) Job worker sends goods to another Job worker
d) Job worker sends goods out from his business premises to end customer.
ITC 04 offline tool below mention details mandatory :
| Details of inputs/capital goods sent for job work as under:
– GSTIN of Job worker – State (in case of unregistered JW) – Challan number issued by principal – Challan date – Description of goods – Unique Quantity Code (UQC) – Quantity – Taxable Value – Types of Goods (1) IGST, CGST, SGST, Cess Tax rate |
Details of inputs/capital goods received back from job worker or sent out from business place of job work:
– GSTIN of Job worker – State (in case of unregistered JW) – Nature of Transaction – Original Challan Number – Original Challan Date Challan details if goods sent to another Job Worker – No. – Date – GSTIN – State (in case of unregistered JW) Invoice detail in case supplied from premises of Job worker – Invoice No – Invoice Date – Description of goods – Unique Quantity code (UQC) – Quantity – Taxable Value |
DEEMED SUPPLY FOR JOB WORK UNDER GST:
As per section 143(3) & 143(4) of the CGST Act, 2017 makes provision for payment of tax when the inputs or capital goods are not returned by the job worker.
The Inputs after processing shall not be returned back within ONE year and capital goods within THREE year of their being sent out, it will be treated as deemed supply and principal will have to pay tax along with interest.
Example :
M/s Mistry Ltd has supplied inputs to job worker M/s Shah Ltd on 10th January 2017. These Inputs not received back till 11th January 2018 by M/s Mistry Ltd., after processing. Find the consequences in this regards?
Ansswer : As per section 143(3) of the CGST Act,2017 principal will be required to pay the tax on supply of inputs. The time of supply is 10th January 2017. If the principal decided to pay tax on 12th January 2018 he will have to pay tax with interest of one year.
TAKING INPUT TAX CREDIT IN RESPECT OF INPUTS AND CAPITAL GOODS SENT FOR JOB WORK (Section 19 of the CGST Act 2017)
The Principal shall subject to such conditions and restrictions as may be prescribed be allowed to input tax credit on inputs& capital goods send to job worker for job work.
Principal shall be entitled to take credit of input tax inputs & capital goods even if the inputs & capital goods are directly send to a job worker for job work without being first bought to his place of business.
Where the inputs & capital goods sent for job work are not received by back the principal after completion of job work or are not supplied from the place of business of the job worker in accordance with section 143(1)(a) & 143(1)(b) with one year & three year of being sent out, it shall be deemed that such input & capital goods had been supplied by the principal to the job worker on the day when the said inputs & capital goods were sent out. Inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. Capital goods are sent directly to a job worker, the period of three year shall be counted from the date of receipt of capital goods by the job worker.
Further, the provision of return of goods is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job-worker.
EXTENDED MEANING OF “INPUT”
As per the explanation provided in Section 143 of the CGST Act, 2017, where certain process is carried out on the input before removal of the same to the job worker, such product after carrying out the process is 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 CLEARING PROVISION
Pursuant to Section 143 (5) of the CGST Act, 2017, 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 such waste may be cleared by the principal, in case the job-worker is not registered.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice. Neither the authors accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.
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