The Central Board of Indirect Taxes and Customs vide Circular No. 38/2018 dated March 26, 2018 has clarified various provisions of job work w.r.t. issuance of challan, requirement of registration, liability to issue invoice, availability of Input Tax Credit and other compliances for both principal and job worker.
For your easy understanding on various job-work procedures & compliances, Mr. Bimal Jain has recorded a Video Presentation which has been mentioned below:
Following is the gist of the Circular for your easy reference:
• Addition of goods by the job worker: It is mentioned that whether any activity is covered within the scope of job work or not shall be determined on the basis of facts and circumstances of each case. Further, 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.
• Requirement of registration for the job worker: Though, Clause (i) of Section 24 of the CGST Act, 2017, mandates registration for making inter-state taxable supply irrespective of threshold limit, but vide Notification No. 10/2017 - Integrated Tax dated October 13, 2017, exemption from mandatory registration was granted in case of supply of services.
Hence, 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.
• Documents required to be issued for sending the goods:
(i) By principal to the job worker - The principal shall prepare Delivery Challan in triplicate, two copies of which may be sent to the job worker along with goods. The job worker should send one copy of the said challan along with the goods, while returning them to the principal.
(ii) From one job worker to another job worker - Goods may move under the cover of a challan issued either by the principal or the job worker. Alternatively, the challan issued by the principal may be endorsed by the job worker indicating the quantity and description of goods being sent.
(iii) From the job worker back to the principal - The job worker should send one copy of the challan received by him from the principal.
(iv) Directly by the supplier to the job worker - Goods may move directly with a copy of the invoice issued by the supplier in the name of the buyer (i.e. the principal) with job worker mentioned as consignee. The buyer (i.e., the principal) shall issue the challan and send the same to the job worker.
(v) In piecemeal by the job worker - The challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker.
(vi) Submission of intimation: FORM GST ITC-04 will serve as the intimation. It is clarified that it is the responsibility of the principal to include the details of all the challans relating to goods sent by him to one or more job worker or from one job worker to another and its return therefrom.
• Valuation of job worker services:
- The value of services would be determined in terms of Section 15 of the CGST Act, 2017, and would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal.
- It is clarified that the value of moulds and dies, jigs and fixtures or tools provided by the principal may not be included in the value of job work services provided its value has been factored in the price for the supply of such services by the job worker.
• Time, value and place of supply of goods by the principal from the place of business/premises of job worker:
- Since the supply is being made by the principal, it is clarified that 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.
- The invoice would have to be issued by the principal.
- 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.
To enrol the course on GST Certification by Bimal Jain, click here
CAclubindia
