As per Section 2 (68) of CGST Act “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.
Registration (Section 22)
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 for limits of registration, i.e. Rs. 20 lakhs or Rs 10 lakhs.
Taking input tax credit in respect of inputs and capital goods sent for job work (Section 19)
The principal is entitled to take input tax credit on inputs send to job worker. Even if the goods are directly sent to a job worker without first sending to the principal’s place of business then also the principal is allowed to take ITC.
If such inputs are not received back by principal within one year of being sent out, it shall be deemed that such goods are supplied by the principal to the job worker, and thus GST is payable by the principal. Where the goods are sent directly to the job worker such period of one year is calculated from the day on which the job worker receives such goods.
The principal is also allowed input tax credit on capital goods sent to a job worker (directly or otherwise) subject to all other conditions applicable to capital goods.
If such capital goods are not received back by principal within three years of being sent out, it shall be deemed that such capital goods are supplied by the principal to the job worker, and thus GST is payable by the principal. Where the goods are sent directly to the job worker such period of three years is calculated from the day on which the job worker receives such goods.
Note: – Such an assumption of supply will not apply in case of moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.
Dispatch of goods without payment of tax to the job worker (Section 143)
The principal may send inputs and capital goods to job work without payment of GST to job worker. Also, he may bring back such goods from job workers’ place to own place of business without payment of GST.
But the principal cannot supply the goods from the place of business of a job worker unless the said principal declares the place of business of a job worker as his additional place of business.
Exception for this provision are: –
- where the job worker is registered under section 25
- where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
- any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.
Note: – The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
Conditions and restrictions in respect of inputs and capital goods sent to the job worker (Rule 45)
- The principal should send the goods to the job worker by a challan including where the goods are sent directly to the job Where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker.
- The challan issued by the principal may be endorsed by the job worker, indicating there in the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.
- The challan endorsed by the job worker may be further endorsed by another job worker, indicating there in the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.
- The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding the said quarter.
Transportation of goods without the issue of invoice (Rule 55)
For transportation of goods for job work the consigner may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, instead of invoice at the time of removal of goods for transportation, containing the following details: –
- Date and number of the delivery challan
- Name, address and GSTIN or UIN of the consigner, if registered
- Name, address and GSTIN or UIN of the consignee, if registered
- Harmonised System of Nomenclature code and description of goods
- Quantity (provisional, where the exact quantity being supplied is not known)
- Taxable value
- 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
- Place of supply, in case of inter-State movement
- Signature
The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely: –
- Original copy being marked as ORIGINAL FOR CONSIGNEE
- Duplicate copy being marked as DUPLICATE FOR TRANSPORTER
- Triplicate copy being marked as TRIPLICATE FOR CONSIGNER
