The Central Board of Excise and Customs (CBEC) last day clarified the issues related to job work under the Goods and Services Tax (GST) regime.
“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.
The circular clarifies that sending goods for job work is not a supply as such, but it acquires the character of supply only when the inputs/capital goods sent for job work are neither received back by the principal nor supplied further by the principal from the place of business / premises of the job worker within one/three years of being sent out. It may be noted that the responsibility for sending the goods for job work as well as bringing them back or supplying them has been cast on the principal.
It further said that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work. “As per the provisions of CGST Act, the job worker is expected to work on the goods sent by the principal and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case.”
It also provides norms for registration for the principal/ job worker, the movement of goods, return of goods, issue of invoice etc.
It was further clarified that the act of non-receiving the goods by principal or no supply from the part of job-worker would attract penalty under the GST laws. In such cases, the goods would be deemed to have been supplied by the principal to the job worker on the day when such inputs or capital goods were sent out to the first job worker.
With regard to the claim of input tax credit, it was clarified that the principal can avail input tax credit irrespective of the fact whether the inputs or capital goods are received by the principal and then sent to the job worker for processing, etc. or whether they are directly received at the job worker’s place of business/premises, without being brought to the premises of the principal. It is also clarified that the job worker is also eligible to avail ITC on inputs, etc. used by him in supplying the job work services if he is registered.