Job Work under GST, Everything you want to know about Job Work in GST FAQs on Job Work, List of Important Queries related to Job Work with there solutions.Understand GST Provisions under GST Regime as per GST Act 2017. “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly; To start with, the expression “job work” refers to a “treatment” or “process”, which is undertaken by one person, who may or may not be registered, to another registered person.
While treatment and processing are commonly understood as services, there is no implication that job work is purely services, or that goods would not be used for such treatment or processing. However, Schedule II of the CGST Act which specifies activities to be treated as supply of goods or supply of services, inter alia provides that any treatment or process which is applied to another person’s goods is a supply of services. Such a deeming fiction in respect of job work is given effect to, based on the primary objective of any job work, which is to provide a service…
Job Work under GST, Job Work Provisions in GST Regime
Whether goods sent by a taxable person to a Job Worker will be treated as supply and liable to GST? If yes, why?
It shall be regarded as supply because supply includes all forms of supply such as sale, transfer, etc. and also includes cases where the conditions as specified in section 143 of the CGST Act, 2017 are not met. Accordingly, the supply by principal to job worker and vice-versa will be treated as supply and liable to GST.
However, it is shall not be regarded as supply if the conditions as specified in section 143 of CGST Act, 2017 are satisfied. As the deeming provision contained in section 143(3) to treat the goods sent by the principal to job worker as supply is applicable only when the condition of section 143 with respect to receiving back the goods within the stipulated period is not satisfied.
Whether the Job worker is liable to pay GST under reverse charge mechanism on the goods or services if notified?
Yes. In terms of section 9(3) of CGST Act, 2017 on the specified categories of supply of goods and/or services, the recipient of such goods and/or services is liable to pay GST under reverse charge basis. Further, Section 143 of CGST Act, 2017 does not provide any exemption to job worker in this regard.
Is a job-worker required to take registration?
Yes, as a Job-worker would be a supplier of services, he would be required to obtain registration if his aggregate turnover exceeds the prescribed threshold.
Whether the goods of principal directly supplied from the job-worker’s premises will be included in the aggregate turnover of the Job Worker?
No. Since the responsibility for accountability of inputs and/ or capital goods lies with principal, it will be included in the aggregate turnover of the principal as enumerated in section 143 of CGST Act, 2017.
What are the provisions relating to availment of input tax credit by the principal in respect of inputs sent to a Job Worker?
In the CGST Act, 2017, aspects relating to availment of input tax credit in respect of inputs sent for job-work have been specifically dealt with in Section 19, which provides that the principal shall be entitled to avail credit of inputs sent to a job-worker if the said inputs, after completion of jobwork or otherwise are received back within a period of one year from the date of being sent to a job worker. In case the inputs are sent directly to the job-worker, the date shall be counted from the date of receipt of inputs by job-worker. Further, if such inputs are not received back within a period of one year then it shall be deemed that such inputs have been supplied by the principal to the job worker on the day when the said inputs were sent out.
Whether the principal is required to raise a taxable invoice in case of goods sent to job worker is deemed as supply in terms of section 143(3)/143(4)?
Yes the principal is required to raise a taxable invoice on the day immediately after the expiry of the one year or three years period for inputs or capital goods as the case may be.
Whether ITC can be taken in respect of moulds & dies, jigs & fixtures, or tools sent to a Job Worker?
Yes. Further, there is no time limit prescribed to receive back such goods from job worker, as Section 143(4) specifically excludes moulds & dies, jigs & fixtures, or tools.
Should job worker and principal be located in same State or Union territory?
No, this is not necessary as provisions relating to job work have been adopted in the IGST Act as well as in UTGST Act and therefore job-worker and principal can be located either in same State or in same Union Territory or in different States or Union Territories.
What are the implications of GST on the principal manufacturer in respect of goods sent on job work before the appointed date and received within 6 months from the appointed date?
In case the goods are returned within 6 months from the appointed date, no tax shall be payable by the original supplier. In case the goods are returned after 6 months from the appointed date, the input tax credit claimed by the original supplier shall be recovered in terms of clause (a) of sub-section (8) of section 142. In either case, both the principal manufacturer and job worker shall declare the details of goods held in stock by the job worker as on the appointed date in the prescribed form
Who is liable to pay tax when the processed inputs are not returned within the time limit specified?
When the processed inputs are not returned within specified time limit, the principal manufacturer is liable to reverse the input tax credit already claimed, which shall be reversed under the GST law.
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