1. Meaning of Job Work and Job Worker : As per Section 2(68) of the CGST Act, 2017, the meaning of word Job Work, that under taking any treatment or processes by a person on goods belonging to another register person and the expression ‘job worker’ shall be constructed accordingly.
2. Meaning of Goods : As per Section 2(52) of the CGST Act, 2017, goods means every kind of movable property other than money and securities, Thus, the term job work is confined to the process undertaken by the job worker on movable goods only.
3. Meaning of Principal: As per Section 143(1) of the CGST Act, 2017, The term “Principal” means a registered person sending taxable goods for job work.
4. Treatment of job work as “service”: As per clause 3 of Schedule II of the GST Law, 2017, any treatment or process which is being applied to another person’s goods is considered as “supply of services”.
5. Dispatch of consumable goods to the job worker: It was held that the meaning attributed to Inputs in the Explanation to Section 143 takes care of the difference between the inputs sent to job worker and the goods returned after some intermediate treatment/process like galvanization that may exhaust some of the inputs sent out. Thus, the Zinc, etc. exhausted in the process of galvanizing need not be physically returned. If the galvanized structures are returned, that will be sufficient compliance of section 143(1)(a) of the CGST Act, 2017.
6. Whether the term “Job worker” includes “own unit”: When the goods are sent for job work to another unit of the same person, an interesting question arises, whether the transfer would be considered as ‘Stock Transfer” or “transfer for job work”. In my opinion, since various units of the same person have been treated as distinct persons under the GST Law, 2017, Transfer to own units would be considered as transfer to job worker. It is important to mention here that goods may be transferred to job worker without payment of tax, subject to other conditions like intimation to GST authorities, return within 1 year etc. , whereas, it is not possible in case of stock transfer.
7. Can the person also use his own goods during the process: It is significant to note that activities involving two or more taxable goods and / or services (other than in relation to immovable property) have been considered as composite contracts under GST Law, 2017. Further, in general, no process or treatment can be completed without adding some incidental goods. Even in case of bleaching process, some chemicals are involved. However, the law says that process must be is applied to another person’s goods. However, if the job worker uses material in a manner so that the goods used by hi become the principal supply, it would not be covered under this clause.
8. As per circular no. 38/12/2018-GST dated 26th March, 2018(para-5): The definition of job work as contained in section 2(68) of the GST Law, 2017, entails that the job work is treatment o process undertaken by a person on goods belonging to another registered person. Thus, the job worker is expected to work on the goods sent by the principal and whether the activity is covered within the scope of “ Job Work” or no would have to be determined on the basis of facts and circumstances of each case. Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work.
9. Under job work services, the output is not owned by the unit providing this service, Therefore, the value of the services is based on the service charge paid, not the value of the goods manufactured. The job worker, as a supplier of services, is liable to pay GST tax if he is liable to be registered. He shall issue an invoice at the time of supply of the services
10. The value of service would include not only the service charges but also the value of any goods or service.
11. Special Procedure for removal of goods under Section 143 of the CGST Act, 2017:
(a) As per Section 143(1) of the CGST Act, 2017, a registered person (the Principal)may, under intimation and subject to such conditions as may be prescribed send any inputs and /or capital goods without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise.
(b) As per Section 143(2) of the CGST Act, 2017, If benefit under this section is availed, the principal shall be responsible and accountable for all transactions between him and the job worker.
(c) As per Rule 45(3) of GST Rules, 2017, details of challans in respect of gods dispatched to a job worker or received from a job worker during a tax period shall be included in Form GST ITC -04 furnished for that period on or before 25th day of the month succeeding the said quarter r within such further period as may be extended by the Commissioner by a notification n this behalf.
12. Publishing, printing and reproduction services: This services includes transfer of intangible inputs, rather than physical inputs, when outsourcing (part or all ) of the production process. The units providing the service do not own or retain usage rights to the intangible inputs. This includes publishing of printed matter, software, etc. , on a fee of contract basis. Services Accounting Code is 998911 as per GST Law, 2017.
13. (A) Publishing on a fee or contract basis: This services includes publishing on a fee or contract basis, of printed matter, software etc. ,
(b) Printing Contracts: As per circular no. 11/11/2017-GST, dated. 20th Oct, 2017:
(a) Supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes, etc printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitute the principal supply.
(b) Principal supply has been defined in section 2(90) of the CGST Act, 2017, as supply of goods or services which constitutes the predominant element of a composite supply and which any other supply forming part of that composite is ancillary.
(c) In case of printing of books, pamphlets, brochures, annual reports and the like where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belonging to the printer supply of printing of the content supplied by the recipient of supply is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.
(d) In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. , falling under chapter 48 or 49. Printed with design, logo, etc. , supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, predominately supply is that of goods and the supply of printing of the content (supplied by the recipient of supply) is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of under chapter 48 or 49 of the customs Tariff.
14. Printing and reproduction services of recorded media, on a fee or contract basis: This service includes newspaper and book printing services, printing services directly onto plastic, glass, metal, wood or ceramics and other printing services. Further these following services also treated as printing and reproduction services of recorded media, on a fee or contract basis:-
(a) Those related to bookbinding, folding, assembling, stitching, gluing, collating, boasting, adhesive binding, trimming, gold stamping services,
(b) Other book finishing services such as folding, cutting, stamping, drilling, punching, perforating, embossing, sticking, gluing and laminating,
(c) Services of processing matrices, films, bromide prints or electronic data in order to generate original texts to be reproduced (composition, photo composition, plate making,
(d) Services of combining text and image techniques for making a reproducible original production services of other reprographic products such as overhead projection foils, sketches, layouts, dummies,
(e) Preparation services of digital data like enhancement, selection, linkage of digital data stored on EDP data carriers, other graphic service activities related to printing rebinding services,
(f) Reproduction services from master copies of gramophone records, compact discs and tapes with music or other sound recordings,
(g) Reproduction services from master copies of videotapes, laser discs, DVD or other media with motion pictures and other video recordings,
(h) Reproduction services from master copies of software and data on all kind of disks, tapes, cartridges, and other media, (Excluding color printing of images from film or digital media, audio and video productions).
15. Value of service in case of Job Work under GST Scenario: Under Job work services, the output is not owned by the unit providing this service. Therefore, the value of the service is based on the service charges paid, not the value of the goods manufactured. The job worker as a supplier of services, is liable to pay GST tax if he is liable to be registered. He shall issue an Tax Invoice at the time of supply of the service. The Value of services would include only the services charges but also the value of any goods or services used by him for supplying the job wok services. The Service Account Code of the above services is 998912 under GST Law, 2017.
16. Difference between printing Contract and Printing Job Work under GST Scenario:
The legislature has made a distinction between the job work and printing contract. In the job work, materials are provided by the Principal, whereas in the Printing Contract, the printer uses its own material also.
17. Requirement of Registration: As per Section 22 (1) of CGST Act, 2017 every supplier shall be liable to take registration in every State or UT from where he makes a taxable supply of goods /or services, if his aggregate turnover in a financial year exceeds threshold limit of Rs. 20 Lakhs or 10 Lakhs in Easter States.
Example for aggregate turnover:
(i) If any taxable person (PAN Based) is having business turnover Rs. 15 Lakhs and Rs. 6 lakhs rental income on immovable property liable to to take GST registration.
(ii) If any taxable person ( PAN Based)is having tax business turnover Rs 13 Lakhs and Rs. 6Lakhs rental income on immovable property not require to take registration (Rs. 13 plus Rs. 6 lakhs = 19 Lakhs, no obligation to take registration.
(iii) Is any taxable person (PAN Based) is having Rs. 25 Lakhs business turnover and such business in “Individual Status “ as per Individual PAN Based he has to take registration for such business and income from immovable property belongs to (HUF PAN BASED) and turnover on immovable property of Rs. 6 lakhs, there is no obligation to take GST registration under HUF capacity.
18. Input Tax Credit :
Conditions for claiming of Input Tax Credit by the service provider: As per section
17(5) of the GST Act, 2017, for the following procurements, he is not eligible for input tax credit, even if used in the course or furtherance of business.
(a) Works contract services when supplied for construction of immovable property, other than plant and machinery.
(b) Goods or Services or both received by a taxable person for construction of an immovable property on his own account, other than plant and machinery, even used in the course or furtherance of business. He is eligible to claim ITC on repairs and maintenance to building or immovable property if the same have not been capitalized in the books of account.
19. Applicable Rate of GST On Job Work on Printing services under GST Scenario:
[as per Updated version of the Notification No. 11/2017-Central Tax (Rate) dated the 28thJune, 2017 as amended upto 1st December, 2019
| Sl No. | Chapter, Section or Heading | Description of Service | Rate (per cent. ) |
| (1) | (2) | (3) | (4) |
| 26 | Heading 9988 (Manufacturing services on physical inputs (goods) owned by others) | (i) Services by way of job work in relation to-
(a) Printing of newspapers; [(b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975)]109; [(c) all products [, other than diamonds, ]110 falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);] (d) Printing of books (including Braille books), journals and periodicals; [(da) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2. 5per cent. or Nil] (e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975). [(ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) respectively;] [(f) all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter; (h) manufacture of clay bricks falling under tariff item 69010010 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);] [(i) manufacture of handicraft goods. Explanation. – The expression ―handicraft goods‖ shall have the same meaning as assigned to it in the notification No. 32/2017 -Central Tax, dated the 15th September, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G. S. R. 1158 (E), dated the 15th September, 2017 as amended from time to time. ] [****] |
5 |
| [(ia) Services by way of job work in relation to- (a) manufacture of umbrella; (b) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent | 12 | ||
| [(ib) Services by way of job work in relation to diamonds falling under chapter-71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); | 1. 50 | ||
| (ic) Services by way of job work in relation to bus body building; [“Explanation- For the purposes of this entry, the term ―bus body building‖ shall include building of body on chassis of any vehicle falling under chapter 87 in the First Schedule to the Customs Tariff Act, 1975. ”] | 18 | ||
| (id) Services by way of job work other than (i), (ia), (ib) and (ic) above | 12 | ||
| [(ii) Services by way of any treatment or process on goods belonging to another person, in relation to- (a) printing of newspapers; (b) printing of books (including Braille books), journals and periodicals {(c) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2. 5 per cent. or Nil. } | 5 | ||
| [(iia) Services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent. | 12 | ||
| [[(iii) Tailoring services. | 5 | ||
| [(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), [(ib), (ic), (id), ] (ii), (iia) and (iii) above. | 18 | ||
| 27 | Heading 9989 | [[(i) Services by way of printing of all goods falling under Chapter 48 or 49 [including newspapers, books (including Braille books), journals and periodicals], which attract CGST @ 6 per cent. or 2. 5per cent. or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer. | 12 |
| [(ii) Other manufacturing services; publishing, printing and reproduction services; materials recovery services, other than (i) above. | 18 |
Author Bio
Does the Prinitng Machinery purchased during Oct 2016 is eligible for transitional credit as capital goods for a job worker (Printing press). Please clarify sir.