Concept of GST on Job Work
The job work sector is one of the major sectors in the Indian Economy. Here a principal manufacturer will provide the inputs or semi-furnished goods to the job worker who would then further process the goods and return the same to the principal. Job workers are considered to be small persons who might not be able to comply with the GST Provisions and payment of the same. So, the whole idea behind the concept of Job Work under GST is to meet the compliance requirements by the principal on behalf of the job worker on the goods processed.
Under the GST Laws or the Act, there are certain special or praticular provisions available with regard to removal of the goods for job-work and receiving back the goods after processing from the job worker without payment of the GST, which will be made available not just to the job worker but also the principal.
As per the GST Act, Job Work has been defined as, the treatment or process which is done by person on goods, while these goods belong to such other registered person. The person who is doing the job of further processing or treatment of goods belonging to the registered person or the principal is the job worker. And the ownership pertaining to the goods will not be transferred to the job worker for the purpose of further processing or treatment of the same. The ownership, therefore, rests with the manufacturer or the principal, and the job worker is only required to carry out the process which is specified by the principal.
Procedural Aspects of Job Work
The GST Act provides certain facilities with certain conditions in relation to job work and some of the same has been discussed below:
- The principal who assigns the work to the job worker and, who is the registered person can send the inputs or capital goods under intimation and pertaining to certain conditions without any payment of tax to a job worker. These goods then after the completion of the work would be brought back without payment of tax. When such goods are passed on to the job worker by the principal, then such principal need not reverse ITC (Input Tax Credit) availed on inputs or capital goods.
- The principal can send inputs or the capital goods to the place of the job worker for such further processing without binging the same to his premises and also claim the ITC for the taxes paid on such input or capital goods.
- The job worker should return such input goods or capital goods sent to him within a period of 1 and 3 years, respectively from the date on which such goods were sent to the job worker.
- After the processing or treatment of the goods, the job worker may clear the goods to,
– Another job worker for further processing,
– Send or forward the goods to another place of business of the principal without payment of any tax as maybe requested by the principal,
– Remove the goods on payment of tax within India or without payment of tax for the export of goods outside India on fulfillment of the conditions.
There shall also be a facility of supply of goods by principal to the third party directly. And this shall be directly from the premises of job worker. This can be done on payment of tax in India or with or without payment of tax for export. For availing this by a principal, he can also declare the premise of the job worker as his additional place of business under his registration with GST. And if the job worker is a registered person, under the GST Act, then the principal need not declare the premise of job worker as an additional place of business as this is mostly completely distinct from the business of the principal.
Prior to the supply of goods to the job worker, the principal should intimate the Jurisdictional Officer, the details of such inputs or capital goods along with proper descriptions which are intended to be sent to the job worker along with details regarding the process which is to be done by the job worker on the same. Such details or intimation should also contain the details of another or additional job worker if any.
And these goods i.e., inputs or capital goods sent to the job work should be covered by challan which is issued by the principal. In case of inputs or capital goods that are sent directly to the job worker, a challan should be issued and this challan shall contain all the details as specified under rule 100f of the Invoice Rules. But it should be noted that all responsibility pertaining to the maintenance of proper accounts for the inputs or capital goods shall lie with the principal.
ITC on Goods Supplied to Job Worker
Under the GST Act, the principal shall be entitled to avail the ITC of the taxes paid on the input goods and capital goods that are sent to the job worker. Even if input or capital goods were directly sent to the job worker to the final consumer without bringing it to the premise of the principal also the ITC can be availed, but the principal need not wait until the same is brought into their premise for availing the ITC.
Extended meaning of Input
Before removing the inputs and capital goods to the premise of the job worker, if any process is carried out, then such product after the processing shall be referred to as an intermediate product. This can be removed from the premise of the principal without payment of tax. Hence, we can say that both intermediate and input products can be cleared without the payment of duty to the job worker.
Time Limit for Returning the Processed Goods
Section 19 of GST Act, provides that inputs and capital goods which are sent to the job workers premise by the principal or manufacturer should be returned after completion of the processing or further treatment for which the same was given or within 1 or 3 years respectively of them being sent out. with respect to moulds and dies, jigs and fixtures, or tools that are supplied by the principal to the job worker, this shall not be applicable and need not be complied with.
Waste Clearing Provisions
Any waste which is generated at the premises of the job worker may be supplied directly by the registered job worker from his place of business on payment of tax or such waste may be cleared by the principal in case the job worker is not registered.
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