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1. Section 2(68) of CGST Act, 2017, defines the term 'job work' to mean undertaking any treatment or process on the goods belonging to another registered taxable person. Any person who does such job work will be considered as 'Job worker'.

2. In terms of section 143(1) of CGST Act, a registered taxable person can send any inputs and/or capital goods without payment of tax to a job worker as well as clear to subsequent job worker under the cover of a Delivery challan there from provided:

a) Such goods (other than moulds and dies, jigs and fixtures or tools) must be received back to any of his place of business within one year (in case of inputs) and within 3years (in case of capital goods), of being sent out.

b) Such goods (other than moulds and dies, jigs and fixtures or tools) must be supplied from the place of business of the job worker on payment of tax within India or with or without payment of tax for export, within one year (in case of inputs) and within 3 years (in case of capital goods), of being sent out.

The principal is not required to reverse the ITC availed on inputs or capital goods dispatched to job-worker

3. The delivery challan shall contain the details specified in Rule 10 of the Invoice Rules and shall be prepared in triplicate, in case of supply of goods, in the following manner, namely:–

i. The Original Copy Being Marked As ORIGINAL FOR CONSIGNEE;
ii. The Duplicate Copy Being Marked As DUPLICATE FOR TRANSPORTER
iii. The Triplicate Copy Being Marked As TRIPLICATE FOR CONSIGNER.

4. Before supply of goods to the job-worker, the principal would be required to intimate the Jurisdictional Officer containing the details of the description of inputs intended to be sent by the principal and the nature of processing to be carried out by the job-worker.

5. The Principal would be responsible for the accountability of the inputs and/or capital goods.

6. As per rule 45 of the CGST Rules, details of the challans in respect of the goods dispatched to or received from a job worker or sent from one job worker to another during a quarter shall be included in Form ITC-04 within 25th of the month succeeding the said quarter. Though it is to note that the said form is not yet available online. Further it is to be noted that, this is mere intimation, and there isn't any need to seek any approval from the officer.

7. Where the inputs or capital goods are not returned to the Principal within 1 or 3 years respectively, 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.

8. It is to be noted that further supply of the inputs and/or capital goods from the job workers premises would be permissible only if the principal declares the place of business of the job worker as his additional place of business except in the following cases:

• Job worker is also registered under the Act or
• Principal is engaged in the supply of goods notified by the Commissioner

Waste/Scrap generated at Job worker Premises

9. As per section 143(5) of CGST Act, any waste and scrap generated during the job work may be supplied on payment of tax by the:

a. Job worker from his place of business, if he is registered, or
b. Principal if the Job worker is not registered.

10. Further as per section 15 of CGST Act, 2017 the value of supply shall be transaction value where price is the sole consideration and parties are not related.

Input tax Credit:

11. Section 19 of the CGST Act, 2017 provides that the principal shall be entitled to take the credit of input tax paid on inputs sent to the job-worker for the job-work.

12. Further, the proviso also provides that the principal can take the credit even when the goods have been directly supplied to the job-worker without being brought into the premise of the principal. The principal need not wait till the inputs are first brought to his place of business.

Transitional Provisions

13. Inputs, as such, or partially processed inputs or the manufactured goods which are sent to a job-worker prior to introduction of GST under the provisions of previous law [Central Excise] and if such goods are returned within 6 months from the appointed day then no tax would be payable. If such goods are not returned within 6 months, the input tax credit availed on such goods will be liable to be recovered.

14. For the purpose of these provisions during the transitional period, the manufacturer and the job-worker are required to declare the details of such goods sent/received for job-work in prescribed format GST TRAN-1.


Published by

CA Priyanka Doddavari
(Asst Manager-Taxation)
Category GST   Report

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