Although Goods and Service Tax Act has provided procedure required to be followed for sending goods for job work and the relevant compliance requirement for the principal and job worker,there is always some element of confusion.This article attemps to bring clarity regarding the same.
What is Job Work?
As per section 2(68) of CGST Act,2017 defines Job Work as "Any treatment of process undertaken by a person on goods belonging to another registered person."
GST Act has further put an end to long standing confusion whether Job work which at times may also involve use of goods other than those provided by principal,whether it shall be treated as supply of goods or servive.
Now as per Schedule -II of CGST Act,2017 which specifies certain activities whether they should be treated as supply of goods or supply of services has specifically mentioned that any treatment or process which is applied to another person's goods is a supply of servive.
To understand the concept of Job Work it is important to understand what exactly is the meaning of "Principal".
According to section Section 143 of CGST Act, Principal is a registered person on whose goods (inputs or capital goods) job work is performed.Section 143 of CGST Act further explains the job work procedure as
- Movement of goods without payment of tax
- On completion of the job work ,the principal can bring the goods back or supply from the place of Job worker.
A very important point to be noted is that only registered person can send goods for job work under said provisions.
Timeline to bring back the goods sent for Job work
- In case of goods(inputs), if not brought back within one year it will be deemed as supply.
- In case of capital goods, if not brought back within three year it will be deemed as supply.
Responsibility of proper books of account
Responsibilty of keeping proper books of account of goods(inputs/capital goods) sent lies with principal.
Documents required for transfer of goods under Job work process
Where goods are sent by principal to only one job worker
Triplicate copies of challan to be prepared in terms of Rules 45 and 55 of the CGST Rules.Two copies will be sent to job worker.The job worker should send one copy of challan with goods while returning.
Where goods are sent from one job worker to another job worker
Challan received by the job worker maybe endorsed to other job worker indicating quantity and description of goods being sent
Where goods are returned to the principal by Job worker
Job worker should send one copy of challan received by him from principal while returning the goods
Supply of goods by the principal from the place of business/premises of job worker
This facilty is available to principal only if job workers place of business is declared as additional place of business by principal or if job work is registered