Sec 143 of CGST Act 2017 deals with provision for ‘Job Work Procedure’
This Article explains about the Job Work under GST its Procedural Part, Document to be issued and Obligation of record to maintain. Disclosure in GSTR-1, Clearance of Scarp or Waste generated, Transitional Provision, ITC Credit, and filling of Quarterly return
Page Contents
- What is Job work?
- Return of material sent out for “Job Work”
- “Job Worker Place as Additional Place of Business of Principal”
- “Record of material sent for Job Work”
- Treatment of Scrap Generated during the Job Work Process
- Input Tax Credit on Job Work “Sec 19 of CGST Act 2017”
- Transitional Provision under Sec 141 of CGST Act 2017
- Quarterly Return ITC04
What is Job work?
As per Sec 2(68) of CGST Act 2017 “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”
From the above definition, we can understand that “Job Work” means sending out Input and Capital goods for further processing to another person (Job Worker) who undertake the further process or treatment on goods belonging to principal”
Return of material sent out for “Job Work”
Section 143 (1) (a) of specifies that the material sent out for Job Work should be bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax
“Job Worker Place as Additional Place of Business of Principal”
Section 143 (1) (b) “Provides that the principal of goods sent out for job work may supply the goods from the place of “Job worker” only if he declares that the Job worker places as “Additional place of Business in his registration Certificate”
“Record of material sent for Job Work”
Section 143 (2) States that “The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal
“Its principal duty to maintain the record of all material sent out for Job work quantity-wise and receipts of the same with the time limit specified under the Act.
Delivery Challan
The principal of goods has to prepare “Delivery Challan” as the time of sending the goods out for job work. Broadly the delivery challan should contain the following.
1. Description of Goods
2. Quantity
3. Market value
4. Applicable GST with the rate (Only for disclosure)
5. Name and Address of Job Worker
The delivery Challan should be prepared in Triplicate as per below
1. Original for “Consignee (Job Worker)”
2. Duplicate for “Transporter”
3. Triplicate for “Consignor “
The numbering of Delivery Challan No and Its disclosure
The Delivery Challan number should be serially number and should be disclosed in the GSTR-1 of the respective month in which the subject Delivery challan is generated under “Document issued head, table no 9 Delivery Challan for job work”
Consequences of not receiving the material back to the place of the principal within the time limit specified.
If the principal of material sent out for Job work fails to receive the Inputs and Capitals goods back within one year and three years respectively shall be treated as “deemed supply”
143 (3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.
143 (4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.
Treatment of Scrap Generated during the Job Work Process
Scrap or waste generated during the “Job Work” can be cleared by the Job Worker by paying the respective tax if he is registered under GST, if he is not registered under GST then “Principal has to clear the same by paying the corresponding tax
The following section deals with the provision of clearance of “Scrap and Waste” under GST
143 (5) Notwithstanding anything contained in sub-section (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.
Input Tax Credit on Job Work “Sec 19 of CGST Act 2017”
As per provision of sec. 19 of CGST Act 2017 “The principal is allowed to take the Input Tax Credit on Inputs and Capital Goods send to job worker. The following provision explains the same in details
Section 19 (1)
The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work.
Section 19 (2)
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.
Section 19 (3)
Where the Inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such Inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out:
Provided that where the 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.
Section 19 (4)
The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on Capital Goods sent to a job worker for job work.
Section 19 (5)
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 Capital Goods even if the Capital Goods are directly sent to a job worker for job work without being first brought to his place of business.
Section 19 (6)
Where the Capital Goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such Capital Goods had been supplied by the principal to the job worker on the day when the said Capital Goods were sent out:
Provided that where the Capital Goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of Capital Goods by the job worker.
Section 19 (7)
Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.
Transitional Provision under Sec 141 of CGST Act 2017
Sec 141 (1) Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day
Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months
Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
Sec 141 (2) Where any semi-finished goods had been removed from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the appointed day and such goods (hereafter in this section referred to as “the said goods”) are returned to the said place on or after the appointed day, no tax shall be payable, if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six months from the appointed day:
Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142:
Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
Sec 141 (3) Where any excisable goods manufactured at a place of business had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the appointed day and such goods, are returned to the said place on or after the appointed day, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to the said place within six months from the appointed day:
Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142:
Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
Sec 141 (4) The tax under sub-sections (1), (2) and (3) shall not be payable, only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed.
Quarterly Return ITC04
The principal of Input and Capital goods has to file ITC04 quarterly basis. It includes the following details.
Table 4 –Details of Input/Capital Goods sent for Job Work
1. GSTIN of Job Worker
2. State of Job Worker (In case of JW is unregistered)
3. Job Work Type (SEZ Or Non SEZ)
4. Challan No
5. Challan Date
6. Type of Goods (Input or Capital Goods)
7. Description of Goods
8. UOM
9. Quantity
10. Taxable Value
11. IGST, CGST, SGST, Cess
12. Action (Addition, Deletion)
13. Status (After validating the file will display an error if any)
Table 5A -Details of Input/Capital Goods received back from job worker to whom such goods were sent for job work: and losses and wastes
1. GSTIN of Job Worker
2. State of Job Worker (In case of JW is unregistered)
3. Original Challan No issued by the Principal
4. Original Challan date issued by Principal
5. Challan No issued by Job Worker
6. Challan date issued by JW
7. Nature of Job Work
8. Description of Goods
9. UOM
10. Quantity
11. Losses and Wastes (UOM, Quantity)
12. Action
Table 5B -Details of Input/Capital Goods received back from job worker other than the job worker to whom such goods were sent for job work: and losses and wastes
1. GSTIN of Job Worker
2. State of Job Worker (In case of JW is unregistered)
3. Original Challan No issued by the Principal
4. Original Challan date issued by Principal
5. Challan No issued by Job Worker
6. Challan date issued by JW
7. Nature of Job Work
8. Description of Goods
9. UOM
10. Quantity
11. Losses and Wastes (UOM, Quantity)
12. Action
Table 5C -Details of Input/Capital Goods sent to job worker and subsequently supplied from premises of job worker; and Losses and Waste
1. GSTIN of Job Worker
2. State of Job Worker (In case of JW is unregistered)
3. Original Challan No issued by the Principal
4. Original Challan date issued by Principal
5. Invoice Number issued by Principal
6. Invoice date issued by Principal
7. Nature of work done
8. Description of Goods
9. UOM
10. Quantity
11. Losses and Wastes (UOM, Quantity)
12. Action
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice. Neither the authors accept 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.
Author Bio
Dear Sir.
i need one small clarification, while sending the material for job work. do we need to show GST rate and amount in the delivery challan.
Please confirm.
If yes, please share the rules and section.
Thanks
Shiv