(Circular issued by Board)

As Per Section 2 (68) of CGST Act, 2017, “Job work” means any treatment or process undertaken by a person on goods belonging to another registered person and expression “job worker” shall be constructed accordingly.

The registered person on whose goods (inputs or capital goods) job work is performed is called the “Principal” for the purpose of section 143 of the CGST Act. The principal must be a registered taxable person under Section 25 of the CGST Act, 2017. The person who under takes to carry job working of another person is called “job worker”

All transaction between Job Worker and Principal is covered under GST  as supply subject to certain exceptions as per Section 143 (1) of GST Act 2017 where to tax is required to be paid by Principal or Job Worker for sending Inputs , Capital Goods , or Finished Goods.

The procedure of Job work has been specified under Chapter XXI as Miscellaneous provisions under GST Act, 2017. Section 143(1) of CGST Act, provides that a registered person (principal) may  ,send inputs or capital goods ,by giving prior intimation to Proper Officer and as per the Procedure laid down in this behalf and in the manner as may be prescribed under GST Rules,  without payment of tax, to a Job worker for Job work and if required, from there subsequently send to another Job worker and so on. Subsequently, on completion of the job work (by the last job worker), the principal shall bring back the goods to his place of business or supply( including export) the same directly from the place of business / premises of the job worker within one year in case of inputs or within three years in case of capital goods ( except moulds and dies, jigs and fixtures or tools)as the case may be.

Section 143(1) (a) and (b) of CGST Act, 2017 prescribed that principal manufacturer shall comply the following responsibilities:

(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;

(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than molds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be.

The Principal has to declare the Job Workers Premises as additional place of business for the purpose of supplying Finished Products directly from the premises of Job Worker instead of bring back the goods to his premises. But, if the Job Worker is already registered under GST then it is not required for the principal to declare the premises of Job Worker for directly supplying from his premises.- Section 143(1)(b)

As per section 143(3) of the CGST Act 2017 , Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.

For Capital Goods , the above period of One Year is to be read as Three Years.

In case of Moulds and Dies, Jigs and Fixtures , the limit of one or three years shall not be applicable and in the event of sale of such goods as scrap , tax is payable by Job Worker if he is registered and in case Job worker is unregistered then Principal is liable to pay tax.

Rule 55 (1) (c) of CGST Rules, 2017 provides that for the purpose of transportation of goods for job work, the principal manufacturer may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of invoice at the time of removal of goods for transportation , containing the following details , namely :-

(i) date and number of the delivery challan;

(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;

(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if registered;

(iv) Harmonized System of Nomenclature code and description of goods;

(v) quantity (provisional, where the exact quantity being supplied is not known);

(vi) taxable value;

(viii) place of supply, in case of inter- State movement;

(vii) 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;

(ix) signature.

Sub-rule (2) of Rules 55, the delivery Challan shall be prepared in triplicate, in case of supply of goods (a) Original for Consignee, (b) Duplicate for transporter and (c) Triplicate for consignor.

In terms of Section 19 (1) and 19(4) of CGST Act, the principal shall, subject to such conditions and restrictions as may be prescribed, be allowed to take credit of input tax on inputs and capital goods sent to a job worker for job work.

Further, as per Section 19(2) and 19(5) of the CGST Act, the principal shall be entitled to take credit of input tax on inputs and capital goods, even both are directly sent to a job worker for job work without their being first brought to his place of business.

Section 19 (3) of CGST Act, where the inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out:

Provided that where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker.

Section 19 (6) of CGST Act, where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out:

Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.

Rule 45 of CGST Rules, 2017 provides conditions. And restrictions in respect of inputs and capital goods sent to the job worker and the sub-rules as under

(1) The inputs, semi – finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker.

(2) The challan issued by the principal to the job worker shall contain the details specified in rule 55.

(3) 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.

(4) Where the inputs or capital goods are not returned to the principal within the time stipulated. In section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.

In order to bring uniformity in the implementation of Job Work procedures. And documentation , CBEC  has issued circular clarifying various issues relating to the same vide Circular No 38/12/2018 dated 26.03.2018.

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