Job Work in GST

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 ‘job worker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The job-worker is required to carry out the process specified by the principal, on the goods.

It is processing of goods supplied by the principal. The concept of job work already exists in Central Excise, wherein a principal manufacturer can send inputs or semi-finished goods to a job worker for further processing. Many facilities, procedural concessions have been given to the job workers as well as the principal supplier who sends goods for job work.The whole idea is to make principal responsible for meeting compliances on behalf of the job-worker on the goods processed by him (job-worker), considering the fact that typically the jobworkers are small persons who are unable to comply with the discrete provisions of the law.

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 payment of GST. The benefit of these provisions shall be available both to the principal and the job-worker.

Procedural Aspects:

The following procedural aspects involved in Job Work process:

  • 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.

  • Principal can send inputs or capital goods directly to the job worker without bringing them to his premises, still the principal can avail the credit of tax paid on such inputs or capital goods.

  • 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.

  • After processing of goods, the job-worker may clear the goods to: (a) Another job-worker for further processing; (b) Dispatch the goods to any of the place of business of the principal without payment of tax; (c) Remove the goods on payment of tax within India or without payment of tax for export outside India on fulfilment of conditions.

The facility of supply of goods by principal to the third party directly from the premises of the job-worker on payment of tax in India likewise with or without payment of tax for export may be availed by the principal on declaring premise of the job-worker as his additional place of business in registration. In case the job-worker is a registered person under GST, even declaring the premises of the job worker as additional place of business is not required.

Before supply of goods to job-worker, principal would be required to intimate the Jurisdictional Officer containing the details of 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 another job-worker, 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. The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

Input Tax Credit:

A person supplying taxable goods to the jobworker shall be entitled to take the credit of input tax paid on inputs sent to the job- worker for the job work. Further, the proviso also provides that the principal can take the credit even when the goods have been directly supplied to the job-worker without bringing into the premise of the principal. The principal need not wait till the inputs are first brought to his place of business.

Time Limits for return of processed goods:

  • The time limit for the return of inputs is with in one year from the date of receipt by the Job Worker.

  • The time limit for the return of capital goods is with in three years from the date of receipt by the Job Worker.

Waste Clearing:

Waste generated at the premises of the job-worker may be supplied directly by the registered jobworker fromhis place of business on payment of tax or s such waste may be cleared by the principal, in case the job-worker is not registered.

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