Query related to job work
This query is : Resolved
26 November 2025
Sir
The Govt company owned the factory. The factory is being used for production of cattle feed.
But instead of being engaged their own labour the Govt Company engaged an entity to run the production.The Govt Company fixed the desired quantity & supply material and the entity determined a charge for converting the materials to finished product(cattle feed).
The entity raised a bill (including GST) and Govt Company release this.
The Govt company does not bother number of labours the entity engaged to produce the cattle feed.
My query to the honourable experts are ::
Does we treat the entity as job worker?
and
Does the liability on labours(ie compliance under labour laws) engaged by the entity can by at any chance be impose on the Govt Company?
Regards
ABHIJIT
The Govt company owned the factory. The factory is being used for production of cattle feed.
But instead of being engaged their own labour the Govt Company engaged an entity to run the production.The Govt Company fixed the desired quantity & supply material and the entity determined a charge for converting the materials to finished product(cattle feed).
The entity raised a bill (including GST) and Govt Company release this.
The Govt company does not bother number of labours the entity engaged to produce the cattle feed.
My query to the honourable experts are ::
Does we treat the entity as job worker?
and
Does the liability on labours(ie compliance under labour laws) engaged by the entity can by at any chance be impose on the Govt Company?
Regards
ABHIJIT
27 November 2025
- Definition of job work (Section 2(68), CGST Act):
Job work means any treatment or process undertaken by a person on goods belonging to another registered person.
- In your case:
- Govt company owns the factory and supplies raw material (cattle feed ingredients).
- The engaged entity only converts raw material into finished cattle feed.
- The entity raises a bill for conversion charges (including GST).
This fits squarely within the definition of job work. The entity is not selling its own goods; it is processing goods belonging to the Govt company.
So yes, the entity should be treated as a job worker under GST.
Job work means any treatment or process undertaken by a person on goods belonging to another registered person.
- In your case:
- Govt company owns the factory and supplies raw material (cattle feed ingredients).
- The engaged entity only converts raw material into finished cattle feed.
- The entity raises a bill for conversion charges (including GST).
This fits squarely within the definition of job work. The entity is not selling its own goods; it is processing goods belonging to the Govt company.
So yes, the entity should be treated as a job worker under GST.
27 November 2025
- General principle:
Labour law obligations (PF, ESI, Minimum Wages, etc.) fall on the employer of the workers.
- In your case:
- The Govt company does not engage labour directly.
- The entity independently hires and manages its own workforce.
- Govt company pays only for conversion charges, not wages.
Therefore, primary liability rests with the entity, not the Govt company.
- Possible exceptions (where Govt company could be exposed):
- If the arrangement is a sham contract (i.e., entity is only a name-lender, but in reality the Govt company controls and supervises the labour).
- If labour laws like the Contract Labour apply, the Govt company may be treated as the principal employer.
- In such cases, the principal employer has obligations like registration, ensuring welfare facilities, and can be held responsible if the contractor fails to comply.
Labour law obligations (PF, ESI, Minimum Wages, etc.) fall on the employer of the workers.
- In your case:
- The Govt company does not engage labour directly.
- The entity independently hires and manages its own workforce.
- Govt company pays only for conversion charges, not wages.
Therefore, primary liability rests with the entity, not the Govt company.
- Possible exceptions (where Govt company could be exposed):
- If the arrangement is a sham contract (i.e., entity is only a name-lender, but in reality the Govt company controls and supervises the labour).
- If labour laws like the Contract Labour apply, the Govt company may be treated as the principal employer.
- In such cases, the principal employer has obligations like registration, ensuring welfare facilities, and can be held responsible if the contractor fails to comply.
27 November 2025
If the contractor raised an Invoice with GST for quantity-based production in the same premises of the government. Then it's not attract to job work. But all labour laws applicable to the contractor, like EPF, ESIC, Bonus, etc. its depent on contractor's licence. The labour licence clearly mentions about nature of the work contract.
28 November 2025
Sincere thanks to Sir Dhirajlal Rambhia for clarify my doubts.
As the company is owned by the Govt there is no such 'sham contract'.
Regards
Abhijit
As the company is owned by the Govt there is no such 'sham contract'.
Regards
Abhijit
28 November 2025
You are welcome.
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