Section 2(68) of the CGST Act 2017 covers the definition of ‘Job work’. It means any process or treatment undertaken on raw materials or semi-finished goods, belonging to another registered person. Thus, a job worker is a person whether registered or unregistered; who is treating or processing the goods of another registered person or principal manufacturer.
GST has provided special provisions for removal of goods for job-work; as well as receiving them back after processing from the job worker, without the payment of GST. These provisions shall apply to both, the principal as well as the job worker.
Conditions for Job Work under GST
After the registration, the principal must submit the details of the inputs to be sent and; the nature of processing to be carried out by the job worker, to the jurisdictional officer. He can send the goods to the job worker either from his place of business; or directly from the place of supply of the supplier of such goods. The principal can avail input tax credit in both cases. However, the effective date for goods sent depends on the place of business. For the goods sent from principal’s place, the effective date is the date of goods sent out. Whereas for the foods sent directly from the supplier’s place; the effective date is the date of receipt by the job worker.
The principal must receive back the goods, sent to the job worker within 1 year; in case of input goods and within 3 years , in case of capital goods. Provided, where the principal does not receive the goods within this period; such goods are treated as supply from the effective date & the principal is liable to pay tax on such goods. However, this condition shall not apply in case of moulds and dies, jigs and fixtures or tools supplied to the job worker.
The principal can send the goods to the job worker under cover of challan; which the principal must issue even for inputs and capital goods directly sent to the job worker. The job work challan must conform to the GST invoice rules & responsibility for keeping proper accounts as per the GST requirements would lie with the principal.
GST Registration for Job Work
A principal can initiate a job contract with the third party job work service provider by declaring the premises of the job worker as additional place of business in the GST registration. Where the job worker is already registered, then declaring the premises of the job worker under additional place of business is not needed.
GST on Job Work
Job work contract which satisfies the conditions mentioned above shall enjoy the special concessions as under.
The Principal need not reverse the input tax credit availed on inputs or capital goods dispatched to the job-worker.
The principal can send goods without the payment of tax to a job worker.
After completing the work, the job worker can send the principal’s goods to another job worker for additional processing and can bring back such goods after the work completed without the payment of tax.
The principal can send goods directly to the job worker without bringing them to his premises can avail the benefit of ITC on such goods.
Provided the above conditions are not satisfied, the GST rate as applicable for job work must be paid by the job worker.
Form GST TRAN-1
Both the job worker and the principal manufacturer must submit Form GST TRAN-1 and provide the details of stock held by the job worker for principal/by job/with job worker. The due date is 30th November 2017. All principals, who have sent goods to job worker before 1st July 2017 must file GST TRAN-1 within 90 days. Inputs sent to the job-worker pre-GST would not attract GST; provided the job worker had returned the goods to the principal before 31st December 2017. Also, the ITC availed on the goods not sent to the principal before 31st December 2017 will be liable to be recovered.
The principal must furnish the form ITC-04 on a quarterly basis and include details of Challan in respect of the following.
Goods Sent from one job worker to another job worker or
Dispatched to a job worker or
Goods Received from a job worker
The due date for furnishing the form ITC-04 is on or before the 25th day of the month, succeeding the quarter. The due date for furnishing form ITC-04 for July-September 2017 is extended to 31st December 2017.