Can we raise debit note for raw material used in Jobwork?

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This discussion addresses the correct procedure for accounting for raw materials used in jobwork when the supplier's materials are of substandard quality. The user is seeking advice on whether to issue an invoice for the used raw materials to the jobworker or raise a debit note, and whether these actions could jeopardise the jobwork status or lead to legal issues. Alternative solutions are also requested.

Bazeer Ahmed

Bazeer Ahmed (Querist)

06 October 2020 Sir / Madam,

We have do job work to some parties (say convert cotton into cotton yarn). As we are manufacturing yarn under jobwork we should receive raw materials from the jobworker and convert them into yarn and dispatch the finished products to them. Sometimes the situation may be aroused that the quality of rawmaterial sent by our jobworker is not suitable for their required quality of finished products. For curtail the loss of production we have to immediately issue our owned rawmaterials to the production and send the finished product to jobworkers as their required quality. In this juncture we need advise on the following points which one is best:

1) Whether can we raise an invoice for the rawmaterials used for the jobworks with GST tax in the pattern “bill to” jobworker and “ship to” our company / factory address? (There is not movement of goods)

2) Or can we raise a debit note to the jobworker with GST tax as there will be no need for quoting bill to / ship to components?

3) If these are wrong then any other correct options?

4) Shall it break jobwork nature? Will any litigation araise?

Kindly advise us.

Advance Thanks,

With regards,
Bazeer L

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 October 2020 You, can raise an invoice for the rawmaterials used for the jobworks with GST tax in the pattern “bill to” jobworker and “ship to” our company / factory address? (There is not movement of goods)

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