Job Work under GST (In present Scenario):-

This article is written by considering the latest provisions and rules made thereunder relating to Job work under GST. This article also covered all the notifications & circular related to Job work till date. Hence article provides clear understanding related to Job work in present scenario.

Following are the relevant Notifications & Circular related to Job Work under GST.

(A) Notifications:-
(a) Notification No. 10/2017 CT, Dt. 28.06.2017:-Amend GST Rules (Already considered latest rules related to Job Work in this article)

(b) Notification No. 53/2017 CT, Dt. 28.10.2017:-Extend the Due date of Form GST ITC-04 for the period of July 17 - Sep 17 to 30th Nov 2017.

(c) Notification No. 14/2018 CT, Dt. 23.03.2018:-Amend GST Rules (Already considered latest rules related to Job Work in this article)

(d) Notification No. 40/2018 CT, Dt. 04.09.2018:-Extend the Due date of Form GST ITC-04 for the period of July 17 - June 18 to 30th Sep 2018.

(e) Notification No. 59/2018 CT, Dt. 26.10.2018:-Extend the Due date of Form GST ITC-04 for the period of July 17 - Sep 18 to 31st Dec 2018.

(f) Notification No. 74/2018 CT, Dt. 31.12.2018:-Amend GST Rules (Already considered latest rules related to Job Work in this article)

(g) Notification No. 78/2018 CT, Dt. 31.12.2018:-Extend the Due date of Form GST ITC-04 for the period of July 17 - Dec 18 to 31st Mar 2019.

(h) Notification No. 15/2019 CT, Dt. 28.03.2019:-Extend the Due date of Form GST ITC-04 for the period of July 17 - Mar 19 to 30th June 2019.

(i) Notification No. 32/2019 CT, Dt. 28.06.2019:-Extend the Due date of Form GST ITC-04 for the period of July 17 - June 19 to 31st Aug 2019.

(j) Notification No. 38/2019 CT, Dt. 31.08.2019:-Waiving of filing of Form GST ITC-04 for the period from July 17 to March 19. However registered person shall include following details in Form GST ITC-04 in the quarter of April 19 - June 19.     

(a) Goods dispatched to job worker in the period from July 17 to Mar 19 but not received from Job worker or not supplied from POB of Job worker as on 31st Mar 19.

(k) Notification No. 35/2020 CT, Dt. 03.04.2020 (Circular 138/2020 CT, Dt. 06.05.2020):-Extend the Due date of Form GST ITC-04 for the period of Jan 20 - Mar 20 to 30th June 2020.

(l) Notification No. 07/2017 IT, Dt. 14.09.2017:- Granting exemption from registration to job-workers making inter-State supply of services to a registered person from the requirement of obtaining registration.


(B) Circular:-
(a) Circular No. 38/2018 CT, Dt. 26.03.2018:-Clarification on issues related to Job Work.

(b) Circular No. 126/2019 Ct, Dt. 22.01.2019:-Clarification on Change of Rate of GST Tax.


In this article we will discuss about following Sections & Rule.:-
1) Section 2(68) of CGST Act, 2017:- Definition.

2) Section 19 of CGST Act, 2017:- Taking input tax credit in respect of inputs and capital goods sent for job work.

3) Section 143 of CGST Act, 2017:- Job work procedure.

4) Rule 45 of CGST Act, 2017:-Conditions and restrictions in respect of inputs and capital goods sent to the job worker.


INTRODUCTION:-
Job work sector constitutes a significant industry in Indian economy. It includes outsourced activities that may or may not culminate into manufacture. The term Job-work itself explains the meaning. It is processing of goods supplied by the principal. The whole idea is to make principal responsible for meeting compliance on behalf of the job worker on the goods processed by him (job worker), considering the fact that typically the job- workers 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.


DEFINITION:-

1) Job Work:- As per 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.

2) Aggregate turnover:- As per Section 2(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

3) Special category States:- As per Article 279A(4)(g) of the Constitution of India special category States includes,
-Assam
-Arunachal Pradesh
-Himachal Pradesh
-Uttarakhand
-Manipur
-Meghalaya
-Mizoram
-Nagaland
-Sikkim
-Tripura
-J&K


SCOPE / AMBIT OF JOB WORK:-
After reading of definition of "Job Work" it is understood that the job worker is expected to work on the goods sent by the principal (i.e. Registered Person) and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case.

However it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work.


APPLICABILITY:-
Section 143 of CGST Act, 2017 provides that the registered person can send goods (i.e. Input as well as Capital goods) to job worker for job work without payment of GST. Thus provision of Section 143 of CGST Act, 2017 is special provision & applicable to registered person only.

It may also be noted that the registered person (principal) is not obligated to follow the said provisions. It is his choice whether or not to avail or not to avail of the benefit of these special provisions.


REGISTRATION:-

(A) Principal:-
As per Section 22 of CGST Act, 2017 the supplier, whose aggregate turnover in financial year exceeds following threshold limit, are required to registered compulsorily under GST.

I) For supplier engaged exclusively "Supply of Goods" (Including exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.)

(a) Normal State:- 
Telangana & Puducherry:- Rs.20 Lakhs.
Other State:- Rs.40 Lakhs.

(b) Special Category State:-
Manipur, Mizoram, Nagaland, Tripura:- Rs.10 Lakhs.
Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand:- Rs.20 Lakhs.
Assam, Himachal Pradesh, Jammu and Kashmir:- Rs.40 Lakhs.

(c) Supplier engaged in making supplies of "Ice cream and other edible ice, whether or not containing cocoa (2105 00 00)", "Pan masala (2106 90 20)", "All goods, i.e. Tobacco and manufactured tobacco substitutes (24)"

i) Normal State:- Rs.20 Lakhs.

ii) Special Category State:-
Manipur, Mizoram, Tripura, Nagaland:- Rs.10 Lakhs.
Jammu & Kashmir, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim,Uttarakhand:- Rs.20 Lakhs.


II) For supplier engaged exclusively "Supply of Service" or "Goods & Service"

(a) Normal State:- Rs.20 Lakhs.

(b) Special Category State:-
Manipur, Mizoram, Tripura, Nagaland:- Rs.10 Lakhs.
Jammu & Kashmir, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, Uttarakhand:- Rs.20 Lakhs.

However supplier can voluntarily registered under GST as per section 25 of CGST Act, 2017 to get the benefit of such special provision of section 143 of CGST Act, 2017.

(B) Job Worker:-
Section 24 of the CGST Act, 2017 provides for compulsory registration of suppliers making any inter-State supply of services. However, exemption from registration has been granted in case the aggregate turnover of the inter-State supply of taxable services does not exceed Rs 20 lakhs or Rs.10 lakhs in case of special category States in a financial year vide notification No. 10/2017 – Integrated Tax dated 13.10.2017.

Further notification 07/2017 IT, Dt. 14.09.2017 hereby specifies the job workers engaged in making inter-State supply of services {other than supply of services in relation to the Jewellery, goldsmiths and silversmiths wares and other articles (Chapter 71)} to a registered person as the category of persons exempted from obtaining registration under the said Act provided aggregate turnover, to be computed on all India basis, not exceeding threshold limit in a financial year.

Therefore, it is clarified that a job worker is required to obtain registration only in cases where his aggregate turnover, to be computed on all India basis, in a financial year exceeds the threshold limit regardless of whether the principal and the job worker are located in the same State or in different States.


JOB WORK PROCEDURE (Section 143 of CGST Act, 2017):-

1) A Registered person (i.e. Principal) can send input & capital goods to job worker for job work without payment tax. (In case of Multiple place of Business ITC-04 have to be file in the location in which ITC has been availed.)

2) Such input & capital shall bring back or directly supply from place of business of job worker by principal within such time limit as mentioned below,

(a) Input:- Within one year of being sent out.
The period of one year, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year. (i.e. total 2 Years.)

(b) Capital goods (Other than moulds and dies, jigs and fixtures, or tools):- Within three year of being sent out.
The period of three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two years. (i.e. total 5 years.)

3) A Registered person (i.e. Principal) shall not supply of goods directly from place of business of job worker unless and until such POB is registered under GST either by Job worker or as additional place of business by principal. Hence It is clarified that the supply of goods by the principal from the place of business / premises of the job worker will be regarded as supply by the principal and not by the job worker and the time, value and place of supply would have to be determined in the hands of the principal irrespective of the location of the job worker’s place of business/premises. It is also clarified that in case of exports directly from the job worker’s place of business/premises, the LUT or bond, as the case may be, shall be executed by the principal.

4) Where the input / capital goods (other than moulds and dies, jigs and fixtures, or tools), sent for job work are not received back by the principal (In any of his place of business) or are not supplied from the place of business of the job worker within a period of one year / three years respectively of their being sent out, it shall be deemed that such input / capital goods had been supplied by the principal to the job worker on the day when the said input / capital goods were sent out. The principal would issue an invoice for the same and declare such supplies in his return for that particular month in which the time period of one year / three years has expired and interest @18% for the intervening period shall also be payable on the tax.

If such goods are returned by the job worker after the stipulated time period, the same would be treated as a supply by the job worker to the principal and the job worker would be liable to pay GST if he is liable for registration.

5) 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.


DOCUMENTS:-

1) Where goods are sent by principal to only one job worker:-
The principal shall prepare in triplicate, the challan in terms of rules 45 and 55 of the CGST Rules, for sending the goods to a job worker. Two copies of the challan may be sent to the job worker along with the goods. The job worker should send one copy of the said challan along with the goods, while returning them to the principal.

As per Rule 55 of CGST Act, 2017 following details should be included in challan,
(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) Harmonised System of Nomenclature code and description of goods.
(v) Quantity (provisional, where the exact quantity being supplied is not known).
(vi) Taxable value.
(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.
(viii) Place of supply, in case of inter-State movement.
(ix) Signature.

2) Where goods are sent from one job worker to another job worker:- 
In such cases, the goods may move under the cover of a challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. The same process may be repeated for subsequent movement of the goods to other job workers.

3) Where the goods are returned to the principal by the job worker:-
The job worker should send one copy of the challan received by him from the principal while returning the goods to the principal after carrying out the job work.

4) Where the goods are sent directly by the supplier to the job worker:-
In this case, the goods may move from the place of business of the supplier to the place of business/premises of the job worker with a copy of the invoice issued by the supplier in the name of the buyer (i.e. the principal) wherein the job worker’s name and address should also be mentioned as the consignee, in terms of rule 46(o) of the CGST Rules. The buyer (i.e., the principal) shall issue the challan under rule 45 of the
CGST Rules and send the same to the job worker directly.
In case of import of goods by the principal which are then supplied directly from the customs station of import, the goods may move from the customs station of import to the place of business/premises of the job worker with a copy of the Bill of Entry and the principal shall issue the challan under rule 45 of the CGST Rules and send the same to the job worker directly.

5) Where goods are returned in piecemeal by the job worker:-
In case the goods after carrying out the job work, are sent in piecemeal quantities by a job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker.


TIME OF SUPPLY:-

1) Time of Supply of goods:- 
Time of supply of goods shall be date of issue of invoice by the supplier. If invoice is not issued, then the last date on which supplier is legally bound to issue the invoice with respect to the supply.

2) Time of supply of services,

(a) If the invoice is issued within the legally prescribed period under section 31(2) of the CGST Act, 2017 then earliest of the following dates,
i) Date of issue of invoice by the supplier.
ii) Date of receipt of payment.

(b) If the invoice is not issued within the legally prescribed period under section 31(2) of the CGST Act, 2017 then earliest of the following dates,
i) Date of provision of service.
ii) Date of receipt of payment.

However if time of supply of service is not determine by above two provision then time of supply of service shall be date on which recipient shows the receipt of service in his books of account


INPUT TAX CREDIT:-

1) Principal:- 
As per Section 19 of CGST Act, 2017 Principal can avail the ITC in respect of Input & Capital goods which was sent to job worker for job work even if such input & capital goods transfer directly to the job worker for job work without being first brought to his place of business.

2) Job Worker:-
The job worker is also eligible to avail ITC on inputs, etc. used by him in supplying the job work services if he is registered.


E-WAY BILL REQUIREMENT:-

1) E-Way Bill is required to be generated before movement of goods by the Principal to the Job Worker or by the registered Job Worker to the Principal or to the another Job Worker.

2) There is no limit in regard of value of consignment of such goods for generating e-way bill for goods sent for job work. For example if the consignment of such goods is Rs.1000 or less, e-way bill shall be generated.


RETURN:-

1) Principal & Job worker need to be furnish following returns under Sections 37, Section 38, Section 39, Section 44 of CGST Act, 2017.

(a) Form 3B in every Month (Computation of Liability after considering of eligible input  tax credit)
(b) GSTR1 on Monthly or Quarterly Basis, If last year T/o is up to Rs. 1.5 Cr. then Quarterly otherwise Monthly.  (Details of outword taxable supplies)
(c) Annual Return in Form GSTR-9 (Once in a Year)
(d) Reconciliation Statement in Form GSTR-9C (if Books are required to be audited)
(e) Form GST ITC-04 in every quarter by 25th day of the month succeeding the quarter. {(As per rule 45), (not applicable to Job worker)}

Form GST ITC-04 includes the details of challans in respect of goods dispatched to a job worker or received from a job worker during a quarter. (goods sent from one job worker to another shall not be included as it has been omitted vide Notf no. 74/2018-CT dt. 31.12.2108.)


SAC CODE:-

1) Job Worker:-
SAC Code:- 9988