9 Dec 2017, 06:48 — 6 min read
What is Job Work and what are the key provisions for it under GST?
Job Work – Section 2 (68) : '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;
The one who does the said job would be termed as ‘Job Worker’. Principal – Section 2 (88) : 'Principal' means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both;
Key Elements of Job Work under GST are as below:
1. The ownership of the goods does not transfer to the Job Worker but it rests with the principal.
2. The Job Worker is required to carry out the process specified by the principal on the goods;
3. The principal necessarily be a registered taxable person. If the principal is unregistered one, then the Job Work relation could not be established under GST law
4. Goods sent for job work should be taxable goods as duty liability will arise only when goods under consideration are taxable.
Registration of a job-worker:
1. Job Worker would be a supplier of services, he would be required to obtain registration if his Aggregate Turnover (AT) exceeds the prescribed threshold.
2. The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the “principal” referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker [Explanation (ii) of Section 22 of CGST Act, 2017]
Thus, a Job Worker whose AT as discussed above is less than prescribed threshold is not required to be registered under the GST Law.
Procedure for Removal of Goods for Job Work
1. A registered person (Principal) can send inputs (including Intermediate Goods)/ 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.
2. 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.
3. 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.
4. 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.
Procedure for sending inputs/capital goods to a job worker
1. 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
2. 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 55
3. Quarterly details of goods sent, received or transferred to a Job Worker to be furnished in Form GST ITC-04 by 25th of the month succeeding the Quarter
4. The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
Conditions of supply for goods from where the job worker is:
The goods shall be permitted to be supplied from the place of business of a job worker as per Para 4 (iii) above only if:-
a) The “principal” declares the place of business of the job-worker as his additional
place of business; or
b) Where the job worker is registered under section 25; or
c) Where the “principal” is engaged in the supply of such goods as may be notified in
1. Inputs, as such, or partially processed inputs which are sent to a Job Worker prior to introduction of GST under the provisions of existing law [Central Excise] and if such goods are returned within 6 months from the appointed day [i.e. the day on which GST will be implemented] no tax would be payable.
2. If such goods are not returned within prescribed time, the input tax credit availed on such goods will be liable to be recovered.
3. If the manufactured goods are removed, prior to the appointed day, without payment of duty for testing or any other process which does not amount to manufacture, and such goods are returned within 6 months from the appointed day, then no tax will be payable.
4. For the purpose of these provisions during the transitional period, the manufacturer and the Job Worker were required to declare the details of such goods sent/received for job-work in prescribed format GST TRAN-1, before 31st October, 2017.
Key for effective compliance of Job Work provisions under GST lies in:
(a) proper intimation to jurisdictional officer
(b) proper covering challan
(c) timely return/ supply of processed goods from the place of business of the Job Worker.
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9 Jul 2019, 10:28
4 Jul 2018, 15:49