Supply of Goods to Job Worker under GST Law – All Provisions

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Supply of Goods to Job Worker under GST Law – All Provisions

Supply of Goods to Job Worker under GST Law – All Provisions.First of all, one need to understand the definition of Job work under Revised GST law . After that it will be easier to understand the provision relating to supply of goods to job worker. Goods either input or capital goods can be directly send to Job worker and supply of input can be directly make from job worker’ place subject to the following provisions provided in Section- 55 of the Revised GST Law. Now check more details for “Supply of Goods to Job Worker under GST Law”

Supply of Goods to  Job Worker under GST Law

Definition as per Section – 2[68] of CGST Act 2017

“job work” means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression “job worker” shall be construed accordingly”

Job Work

  • Include all activities or process whether relates to manufacturing or  any operation to complete the process.
  • Goods belongs to Registered Person.

JOB WORK PROCEDURE (Sec 143)

¨Principal may under intimation send any inputs or capital goods, without payment of tax, to a job worker for job-work and from there subsequently send to another job worker

AND SHALL

  • Bring back input within one year and capital goods within three years of their being sent out, to place of business without payment of tax
  • Supply such inputs or capital goods, within one year and three years, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export
  • The principal shall not supply the goods from the place of business of a job worker  unless he declares the place of business of the job-worker as his additional place of business

Section 132 of GST – Punishment for certain offences

EXCEPTION

  • (i) where the job worker is registered under section 25; or
  • (ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner

PRINCIPAL shall be responsible for  keeping proper accounts for inputs or capital goods

  • If INPUTS or CAPITAL GOODS are not received back by principal  or are not supplied within a period of one year or three years of being sent out
  • It shall be deemed that such inputs or capital goods had been supplied to Job Worker on the day when the said inputs/Capital Goods were sent out

Treatment of Waste and Scrap

  • May be supplied by Job Worker on payment of Tax if he is registered.
  • Otherwise by the principal, if the job worker is not registered

Treatment of Waste and Scrap

  • May be supplied by Job Worker on payment of Tax if he is registered.
  • Otherwise by the principal, if the job worker is not registered

ITC on inputs sent to job worker for job work : Sec 19

  • PRINCIPAL shall be allowed input tax credit on such inputs
  • Even if the inputs are directly sent to a job worker for job-work without being first brought to his place of business

Consequences of non receipt of inputs sent for job work

  • Non receipt of inputs within one year of inputs being sent out
  • it shall be deemed that such inputs had been supplied by the principal to the job-worker on the day when the said inputs were sent out

SEC:141 Transitional provisions

¨Where any inputs/semi finished / Finished goods had been removed prior to the appointed day in existing law and such inputs/semi finished goods are returned to the said place within six month from the appointed day, no tax shall be payable.

  • The period of six months can be extended by the Commissioner up to two months
  • If not returned within Six/Eight Months ITC shall be recovered

Provision for supply of goods to Job worker

1. Registered Taxable Person [herein after referred as Principal] to supply goods to job worker for job work without the payment of tax, under intimation and subject to such conditions as may be prescribed. The same goods can be sent to another job worker and so on. To effect the above , following condition need to be satisfied

  • Bring back input after job work or otherwise and/ or capital goods other than mould and dies, jigs and fixture or tool, to any of his place of business without payment of tax within one year and three year respectively.
  • Supply directly from there on payment of taxes within India or with or without payment of taxes for export as the case may be within the period stipulated above.
  • Supply of goods from place of business of job worker within India with payment of taxes, with or without payment of taxes for export, as the may be. Provided the Principal declared the place of business of job worker his additional place of business.In the following cases the said provision shall not be applicable
    • where the principal is supplying such goods as may be notified by commissioner in this behalf.

2. The onus of prove for accountability of input and or capital goods shall be of Principal.

3. Where the inputs sent for job work are not return to principal after job work or otherwise within period of one year being sent out , it shall be treated as supply to job worker on the day of input sent for job work.

4. Where the capital goods other than mould and dies, jigs and fixture or tool, sent for job work are not return to principal after job work or otherwise within period of three year of being sent out , it shall be treated as supply to job worker on the day of capital goods sent for job work.

5. Job worker may supply the waste or scrap generated from job work directly from his place of business on payment of taxes, if he is registered, otherwise by principal, if job worker is not registered

FAQ on Job Work

Question 1. Whether goods sent by registered taxable person to job worker treated as supply of goods and liable to tax?

Ans – No. Proviso 5 of the Schedule –I provides that supply of goods from RTP to job worker shall not be treated as supply of goods as per Section

2. Whether the goods of principal directly supplied from Job worker’s premises will be included in the turnover of Job worker?

Answer – No. That will be added in the turnover of principal.

Q. 3. What are the provision of taking ITC in respect of input/ capital goods sent to job worker?

Ans – As per Section 20 of Revised MGL, Principal shall be entitled to take credit of input or capital goods. If the input or capital goods has not been received back within stipulated time of one year and three year respectively, ITC shall be paid. ITC can be claimed again as when the goods have been received.

Q. 4. Are the provision of job work applicable to all category of person?

Ans – No. it is applicable only to registered taxable person who send goods for job work. In other word , these provision are not applicable to exempted or non taxable goods.

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