What
is meaning of job work?
The term Job-work itself explains the meaning. A principal
manufacturer can send inputs or semi-finished goods to a job worker for further
processing. And after processing job worker will be return the goods to the principle
or as per direction by the principle.
Meaning
of job work under GST
Section 2(68) of the CGST Act, 2017 defines job work as ‘any
treatment or process undertaken by a person on goods belonging to another
registered person’. The one who does the said job would be termed as ‘job
worker’. The ownership of the goods does not transfer to the job worker but it
rests with the principal. The job worker is required to carry out the process
specified by the principal, on the goods.
Job
work Procedural aspects:
a) Principal can send inputs/ capital goods under intimation and
subject to certain conditions without payment of tax to a job worker and from
there to another job worker and after completion of job work bring back such
goods without payment of tax. The principal is not required to reverse the ITC
availed on inputs or capital goods dispatched to job worker.
b) Principal can send inputs or capital goods directly to the job
worker without bringing them to his premises, still the principal can avail the
credit of tax paid on such inputs or capital goods.
c) However, inputs and/or capital goods sent to a job worker are
required to be returned to the principal within 1 year and 3 years,
respectively, from the date of sending such goods to the job worker.
d) After processing of goods, the job worker may clear the goods
to-
(i) Another job worker for
further processing;
(ii) Dispatch the goods to any of the place of business of the
principal without payment of tax;
(iii) Remove the goods on payment of tax within India or without
payment of tax for export outside India on fulfilment of conditions.
Input
Tax credit on goods supplied to job worker
As per section 19 of CGST Act 2017 a principal send goods to the
job worker than the principal shall be entitled to take the input tax credit on
the goods send by him. 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 bringing into the premise of the principal. The principal need
not wait till the inputs are first brought to his place of business.
Time
Limits for return of processed goods
As per section 19 of CGST act 2017, principal can be avail input
tax credit within one year or if capital goods than the time limit will be
extended till three year. Further, the
provision of return of goods is not applicable in case of moulds and dies, jigs
and fixtures or tools supplied by the principal to job worker.
Extended
meaning of input
As per the explanation provided in section 143 of the CGST Act,
2017, where certain process is carried out on the input before removal of the
same to the job worker, such product after carrying out the process to be
referred as the intermediate product. Such intermediate product can also be
removed without the payment of tax. Therefore, both input and intermediate
product can be cleared without payment of duty to job worker.
Waste
clearing provisions
section 143 (5) of the CGST
Act, 2017, waste generated at the premises(place) 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.
Transitional
provisions: Inputs as such or partially processed inputs
which are sent to a job worker prior to introduction of GST under the
provisions of existing law [Central Excise] and if such goods are returned
within 6 months from the appointed day i.e. 1st July, 2017 no tax would be
payable. If such goods are not returned within prescribed time, the input tax
credit availed on such goods will be liable to be recovered.
Whether
the job worker (who converts barley into Malt) has to charge GST from the
Principal only on the Job Work charges or full value of goods, i.e. (Value of
Raw Material + Job Work Charges)?
The
only worker has to pay gst on job work charges only.
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