Issue: Whether any inputs (other than the goods provided by the principal) can be used by the job worker for providing the services of job work?
Clarification: In addition to the goods received from the principal, job worker can use his own goods for providing the services of job work.
i) Issue: Is it compulsory to take registration for a person involved in job work transaction? Clarification: It is his choice whether or not to register & avail the benefit of the provisions of section 143 of the CGST Act which are applicable only to a registered person.
iii) Issue: Whether a job worker is required to obtain registration when they are located i) In the same State where the principal is located. or ii) In a State different from that of the principal.
Clarification: Job worker is required to obtain registration only if his aggregate turnover exceeds the prescribed limit whether or not the principal and the job worker are located in the same states or in different states.
Issue: Whether the principal can supply goods directly from the job worker’s place of business/premises to its end customer and if yes, whether the supply will be regarded as having been made by the principal or by the job worker. Clarification: Supply of goods by the principal from the place of business/premises of the job worker will be regarded as supply by the principal and not by the job worker (provided it is an additional place to the principal).
Issue: What are the documents required to be issued for sending the goods
i) From the principal to the job worker Clarification: Challan to be issued by the principal in triplicate. Two copies of the challan are sent to the job worker along with the goods. The job worker should send one copy of the said challan along with the goods while returning them to the principal ii) From one job worker to another job worker
Clarification: If such goods are sent a from one job worker to another job worker, He may endorse the challan issued by the principal The principal can issue DC for such transfer He may send goods on his own DC
iii) From the job worker back to the principal.
Clarification: The job worker should send one copy of the challan received by him from the principal after carrying out the job work.
iv) Directly by the supplier to the job worker
Clarification: The goods may move from the supplier to the job worker with a copy of the invoice issued by the supplier in the name of the buyer (i.e. the principal) wherein the job worker’s name and address should also be mentioned as the consignee and the challans is to be issued as per (i)
v) Where goods are returned in piecemeal by the job worker:
Clarification: By a job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker.
Clarification: An e-way bill is required to be generated by every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees even in cases where such movement is for reasons other than for supply (e.g. in case of movement for job work). However, for interstate movement of goods e-way bill shall be generated either by the principal or by the registered job worker irrespective of the value of the consignment.
Clarification: Yes, Form GST ITC-04 will serve as the intimation as envisaged under section 143 of the CGST Act and It is the responsibility of the principal to include the details of all the challans relating to goods sent by him to one or more job worker from one job worker to another and its return therefrom.
Issue: With regard to the supply of goods from principal to the recipient from the job worker’s place of business/premises and the supply of services by the job worker what are the provisions
i) Time, value and place of supply in the hands of principal or job worker
ii) Issuance of invoices by the principal or job work
Clarification: In case of supply by job worker Invoicing and TOS: Shall issue an invoice at the TOS determined in terms of section 13 of the CGST Act Value: Determined in terms of section 15 of the CGST Act and would include not only the service charges but also the value of any goods or services used by job worker for supplying the job work services, if recovered from the principal. Note: Value of such moulds and dies, jigs and fixtures or tools may not be included in the value of job work services provided its value has been factored in the price for the supply of such services by the job worker Supply by the principal from the place of business/ premises of job worker: Since the supply is being made by the principal, it is clarified that the time, value and place of supply would have to be determined in the hands of the principal irrespective of the location of the job worker’s place of business/premises. Further, the invoice would have to be issued by the principal. Illustration: The principal is located in State A, the job worker in State B and the recipient in State C. In case the supply is made from the job worker’s place of business/premises, the invoice will be issued by the supplier (principal) located in State A to the recipient located in State C. The said transaction will be an inter-State supply. In case the recipient is also located in State A, it will be an intra-State supply.
8. Availability of input tax credit to the principal and job worker:
Issue: Whether ITC can be availed by
i) Principal in respect of inputs / capital goods that are directly received by the job worker
ii) Job worker in respect of inputs, etc. used by him in supplying job work services
Clarification i) ITC would be available to the principal, irrespective of the fact whether the inputs or capital goods are received by the principal and then sent to the job worker for processing or they are directly received at the job. ii) Job worker is also eligible to avail ITC on inputs, etc. used by him in supplying the job work services if he is registered. The content of the article is based on Circular No.38/12/2018 dated 26th Mar’18