Meaning of Job Work
“Job work” means any treatment or process on raw material, intermediate or finished goods undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly. If the person is unregistered, then the job work relation could not be established under GST law.
JOB WORKER- The person who is treating or processing the goods belonging to other person.
PRINCIPAL-The person to whom the goods belongs.
INPUT TAX CREDIT
The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work.
The principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business.
For capital goods, the period of taking Input tax credit shall be three year. And for other inputs the period shall be one year.
TRANSITIONAL PROVISIONS RELATING TO JOB WORKS
- Where any inputs received at a place of business or semi-finished goods or any excisable goods manufactured at a place of business had been removed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs, semi-finished goods or excisable goods are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day.
Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months
Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered
The tax shall not be payable, only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed day.
PROCDURE FOR JOB WORK
- A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––
- 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;
- supply such 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 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:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—
- where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
(2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
(3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise are not supplied from the place of business of the job 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.
(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the or are not supplied from the place of business of the job within a period of three years of their 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.
(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. Explanation.––For the purposes of job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.
Conditions and restrictions in respect of inputs and capital goods sent to the job worker:
(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 Invoice.10:
(3) The details of challans in respect of goods dispatched to a job worker or received from a job worker during a tax period shall be included in FORM GSTR-1 furnished for that period.
(4) Where the inputs or capital goods are not returned to the principal within the time stipulated in section 143, the challan issued under sub-rule (1) shall be deemed to be an invoice for the purposes of the Act.
REGISTRATION FOR JOB WORKER
As per GST Law of India, registration is required only in cases where the job worker is or the principal declares the place of business of the job worker as his additional place of business. As job work is a service, the job worker would be required to obtain registration if his aggregate turnover exceeds the prescribed threshold.