Pravin Saraswat, FCA, CS, DISA
GST which is a common law for goods and services, is about to complete its first 9 months on 31st March and has steadily gained some level stability in its application and understanding by the professionals and business community. Government has issued a circular NO. 38/12/2018 on 26th March, 2018 to further clarify the queries in connection of the Job work under GST. Law related to ‘Job Work’ in light of this circular is being summarized as under:
WHAT IS JOB WORK ?
1. In the age of outsourcing, it is common to get certain operations done from another person. This latter person may carry out either a part of the process allowing its completion by another person or by the persons sending the goods or may himself complete the goods. Such operations are called job work operations. The person sending the goods is known as `Principal’ and that carrying out the operation is known as `Job worker’
2. Principal has to declare the place of business/premises of Job Worker as his additional place of business in his registration, except where the Job worker himself is registered under GST, to avail the facility of sending Inputs and Capital Goods, without payment of GST.
3. Principal can send the goods to the job worker who is located within state or out of state. Job worker has to obtain registration under GST when his aggregate value of work computed on all India basis exceeds Rs. 20 Lacs or Rs. 10 Lacs (in case of special category states), as the case may be. Mandatory requirement of obtaining registration by job worker, in case of Inter-State transaction between Principal and Job Worker has been done away with effect from 13/10/2017.
TAX IN THE CASE OF JOB WORK:
4. Principal has to bring back such inputs /capital goods or supply such goods from the premises of job workers within 1 year ( in case of inputs) and 3 Years ( in case of capital goods) . This provision is not applicable in case of Moulds, Dies, Jigs, fixtures and tools supplied by Principal to Job worker. Failure to stick to these time limits would result in treating the goods as ‘Supply’ on the day when the said inputs / capital goods were sent out and applicable tax and interest for the delayed period would be paid by `Principal’. Job worker is liable to pay GST on the supply of Job work services.
Capital Goods has been defined u/s 2(19) of the CGST Act, 2017 as capital goods means goods, the value of which is capitalised in the books of accounts of the person claiming the credit.
5. Waste and scrap generated during the job work would also be dealt with in the same manner, treating it as owned by Principal.
DOCUMENTATION AND FILING:
6. Delivery Challan: While sending the goods, Principal has to send the goods under the cover of a delivery challan containing the details as provided under Rule 55 of CGST Rules. Such challans will be prepared in TRIPLICATE. Two copies of such challans may be sent to job worker along with the goods. Job worker would send back one copy of said challan, duly endorsed, along with the goods, while returning the goods to principal. In case, the job-worked goods are returned to Principal in piecemeal, then the Job-worker has to issue their own challan, which would accompany the goods.
7. E-Way Bill: In accordance with Rule 138, an e-way bill is required to be generated by every registered person who causes movement of the goods even in case of job work. E-way bill would be required if the value of goods exceeds Rs. 50000/- in case of within state supply and in every case, where the movement of goods is from one state to another state, irrespective of the value of goods.
8. Intimation of Job work to department by Principal: Every principal has to submit ITC-04 on the quarterly basis before 25ty day of month succeeding the quarter. This form would serve the purpose of intimation also.
(The author is a Jaipur based practicing Chartered Accountant and can be reached on 09829063908, firstname.lastname@example.org)