Hemanta Kumar Behera,
B.com, ACA, ACMA
Articles Covers Introduction to Job-work Procedure in GST, Meaning of job-work for GST, Job-work procedural aspects under GST, Accounts & records,– Delivery Challan, Job-work procedural –Flow chart, Job work Charges,Time Limits for the return of processed goods, Waste clearing provisions,Form ITC-04 and Authors Remark on Job-work Procedure in GST.
Job-work sector constitutes a significant industry in Indian economy. It includes outsourced activities that may or may not culminate into manufacture. The term Job-work itself explains the meaning. It is processing of goods supplied by the principal.
The concept of job-work already exists in previous laws and The GST Act makes special provisions with regard to removal of goods for job-work and receiving back the goods after processing from the job-worker without the payment of GST. The benefit of these provisions shall be available both to the principal and the job-worker.
What is job-work :-
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 ‘jobworker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The jobworker is required to carry out the process specified by the principal on the goods.
Job-work procedural aspects :-
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.
c) 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.
d) 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.
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.
Accounts & records :-
The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
Delivery Challan :-
As per Rule -55 of CGST Rule 2017. 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,
the consigner 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) Harmonised 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
(2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely:–
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.
Job work Charges :-
Job work Charges by job worker shall be treated as supply of service and accordingly GST is applicable – Treatment or process: Any treatment or process which is applied to another person’s goods is a supply of services.
Time Limits for the return of processed goods :-
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 of their being sent out. 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.
Waste clearing provisions :-
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.
Form ITC-04 :-
FORM GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-
GST law allows any registered person (principal) to send taxable goods – both inputs and capital goods, without payment of tax, to a job worker. The goods also allowed to send directly from any other source to job worker. Input Tax Credit is allowed on such goods sent for job work. There can be further movement of such goods from one job worker to another or to the domestic or overseas customer.
Very liberal provisions are made to receive back the goods sent for job work. In case the goods are not received back within specified period such goods shall be treated as deemed supply on the day when the said goods were sent out and tax is applicable with interest theron. Job work Charges by job worker shall be treated as supply of service and accordingly GST is applicable.