Introduction

In a business scenario, it may not be possible for an industry to carry out all processes of manufacturing the product within its own premises. In such an eventuality, the manufacturing unit will have to get the work done i.e. processing of the raw materials or intermediate product from other businesses. The process performed by a person on the goods belonging to another registered person is commonly understood as Job Work.

Meaning & Nature of job work:

Section 2(68) of CGST Act, 2017 defines the meaning of the term ‘job work’. In terms of the said provision, it means a person undertaking any treatment or processing of goods belonging to another registered person. Any person who executes such job work will be considered as “Job worker”. As per the Section 2(68) the Job worker may or may not be registered but the principal is required to be registered.

In terms of clause 3 of Schedule II to CGST Act 2017, any treatment or process applied to another person goods is to be treated as supply of services.

Job work procedure

Section 143 of the CGST Act, 2017 deals with job work procedure. The principal may under intimation send any inputs, semi-finished goods or capital goods without payment of tax to a job worker for job work and from there subsequently send to another job worker and likewise. The principal is required to file Form GST ITC-04 by the 25th day of the month succeeding the quarter. The said form will serve as intimation as envisaged under section 143 of the CGST Act, 2017.

According to Section 143(2), the responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

Availment of ITC on goods sent for job work

According to Section 19(2) of CGST Act, the principal can avail the ITC where goods are sent to job worker premises directly from the vendor location without coming to the principal’s premises.

Time limit for returning goods sent for job work

According to Section 19(3) read with 143(3) of CGST Act, when inputs are sent for job work without payment of tax and neither received back within 1 year nor supplied from the job worker premises, it shall be deemed to be supplied by the principal to job worker as on the date when the goods were sent out for job work.

According to Section 19(6) read with 143(4) of CGST Act, when capital goods are sent for job work without payment of tax and neither received back with in a period of 3 years nor supplied from the premises, it shall be deemed to be supplied by the principal to job worker as on the date when the goods were sent out for job work.

Section 19(7) of CGST Act, extends the benefit that the time limit of 1/3 years will not be applicable for moulds, dies, jigs and fixture or tools sent out to a job worker.

Consequence when goods not returned within time

If the inputs or capital goods are not returned within time limit specified, the principal is liable to pay tax along with interest @18% from the day goods sent out by deeming the activity as an outward supply.

Documents to be issued by manufacturer or Job worker

The principal has to raise triplicate challan when sending goods to job work, one challan should be retained and remaining two challan will be sent to the job worker.

The details of the Delivery Challan shall be as follows:

(i) date and number of the delivery challan,

(ii) name, address and GSTIN of the consigner, if registered,

(iii) name, address and GSTIN or UIN of the consignee, if registered

(iv) HSN code and description of goods,

(v) quantity (provisional, where the exact quantity being supplied is not known),

(vi) taxable value,

(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or

cess, where the transportation is for supply to the consignee,

(viii) place of supply, in case of inter-State movement, and

(ix) signature.

GST Rates in Job Work

CGST rates for job work, which falls under HSN 9988 are as follows:

(i) CGST @ 2.50% in case of services by way of job work relating to:

(a) Printing of newspapers;

(b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975)

(d) Printing of books (including braille books), journals and periodicals;

(e) Printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.50%. or Nil

(f) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975

(g) manufacture of leather goods or footwear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975

(h) All food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975;

(i) All products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975, except dog and cat food put up for

retail sale falling under tariff item 23091000 of the said Chapter;

(j) Manufacture of clay bricks falling under tariff item 69010010 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975)

(k) manufacture of handicraft goods.

(ii) CGST @ 6% is case of services by way of job work in relation to- (a) manufacture of umbrella;

(b) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6%.

(iii) CGST @ 0.75% in case of services by way of job work in relation to diamonds falling under chapter 71 in the First Schedule to the

Customs Tariff Act, 1975 (51of 1975);

(iv) CGST @ 9% in case of services by way of job work in relation to bus body building;

(v) CGST @ 6% in case of job work services other than (i), (ii), (iii) or (iv) above. This has been clarified vide Circular 126/45/2019-GST dated November 22, 2019.

(vi) CGST @ 2.50% in case of services by way of any treatment or process on goods belonging to another person, in relation to printing of newspapers, books (including Braille books), journals & periodicals and all goods falling under Chapter 48 or 49, which attract CGST @ 2.50% or Nil

(vii) CGST @ 6% in case of services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or 49 which attract CGST @6%.

(viii) CGST @ 2.50% is case tailoring services.

(ix) CGST@ 9% in manufacturing services on physical inputs (goods) owned by others, other than any of the above