Job Work under GST

Job Work under GST

 

Job work has been defined under Section 2(62) of the Model GST Law as “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”.

Again, Job work shall constitute any treatment or process on goods belonging to some other person. Thus, unless there is a supply of goods for undertaking any further goods, there cannot be a job work.  Also, there cannot be a job work for unregistered person or for non taxable person.

Treatment of Job worker as a separate Taxable Person

For all purpose of GST Law, Job worker, except the Job worker specified in Section 43A shall be construed as a separate taxable person and thus, all supply of goods and / or services between the Principal and the Job worker shall be subjected to GST.  Thus, it shall not be limited to levy of services or supply of goods during job work to Principal.

Special case of certain Jobworker

Section 43A(1) of the Goods and Service Tax Act, 2016 is applicable to both the Acts i.e. the CGST Act as well as the SGST Act. The section provides that the Commissioner may permit a registered taxable person (herein referred to in this section as the “principal”), by special order and subject to conditions as may be specified by him, to send taxable goods, without payment of tax, to a job worker for job-work and from there subsequently send to another job worker and likewise, and may, after completion of job-work, allow to-

  1. bring back such goods to any of his place of business, without payment of tax, for supply therefrom on payment of tax within India, or with or without payment of tax for export, as the case may be, or
  2. supply such goods from the place of business of a job-worker on payment of tax within India, or with or without payment of tax for export, as the case may be.

The above scenario can be captured as under:

 

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The proviso to sub-section (1) of section 43A provides that the goods shall not be permitted to be supplied from the place of business of a job worker in terms of clause (b) unless the “principal” declares the place of business of the job-worker as his additional place of business except in a case-

  • where the job worker is registered under section 19; or
  • where the “principal” is engaged in the supply of such goods as may be notified in this behalf.

Section 43A(2) provides that the responsibility for accountability of the goods including payment of tax thereon shall lie with the “principal”.

Transition Provisions under GST

Inputs removed for job work and returned on or after the appointed day

  1. As applicable to CGST Act

Section 150(1) of the Goods and Service Tax Act, 2016 provides that where any inputs received in a factory had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of earlier law prior to the appointed day and such inputs, after completion of the job work, are returned to the said factory on or after the appointed day, no tax shall be payable if such inputs are returned to the said factory within six months from the appointed day.

The first proviso to this section states that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period not exceeding two months.

The second proviso to this section provides further that tax shall be payable by the job worker if such inputs are liable to tax under this Act, and are returned after a period of six months or the extended period, as the case may be, from the appointed day. Further, the third proviso states that tax shall be payable by the manufacturer if such inputs are liable to tax under this Act, and are not returned within a period of six months or the extended period , as the case may be, from the appointed day.

Section 150(2) states that the provisions of sub-section (1) shall apply only if the manufacturer and the job worker declare the details of the inputs held in stock by the job worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed.

  1. As applicable to SGST Act

Section 150(1) of the Goods and Service Tax Act, 2016 provides that where any inputs received at a place of business had been despatched as such or despatched after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of earlier law prior to the appointed day and such inputs, after completion of the job work, are returned to the said place of business on or after the appointed day, no tax shall be payable if such inputs are returned to the said place of business within six months from the appointed day.

The first proviso this section states that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period not exceeding two months:

As per second proviso to section 150(1), it has been provided further that tax shall be payable by the job worker if such inputs are liable to tax under this Act, and are returned after a period of six months or the extended period, as the case may be, from the appointed day. The third proviso further states that tax shall be payable by the person despatching the inputs if such inputs are liable to tax under this Act, and are not returned within a period of six months or the extended period, as the case may be, from the appointed day.

Section 150(2) of the Act provides that the provisions of sub-section (1) shall apply only if the person despatching the inputs and the job worker declare the details of the goods held in stock by the job worker on behalf of the said person on the appointed day in such form and manner and within such time as may be prescribed.

 Semi-finished goods removed for job work and returned on or after the appointed day

  1. As applicable to CGST Act

Section 151(1) of the Goods and Service Tax Act, 2016 provides that where any semi-finished goods had been removed from the factory to any other premises for carrying out certain manufacturing processes in accordance with the provisions of earlier law prior to the appointed day and such goods after undergoing manufacturing processes (herein after referred to as “the said goods”) are returned to the said factory on or after the appointed day, no tax shall be payable if the said goods are returned to the said factory within six months from the appointed day.

The first proviso to this sub-section states that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period not exceeding two months.

Further, as per second proviso, tax shall be payable by the person returning the said goods if such goods are liable to tax under this Act and are returned after a period of six months or the extended period, as the case may be, from the appointed day. The third proviso further states that tax shall be payable by the manufacturer if such goods are liable to tax under this Act, and are not returned within a period of six months or the extended period, as the case may be, from the appointed day:

As per forth proviso, the manufacturer may, in accordance with the provisions of the earlier law, transfer the said goods to the premises of any registered taxable person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

Section 151(2) provides that the provisions of sub-section (1) shall apply only if the manufacturer and the job-worker declare the details of the goods held in stock by the job-worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed.

  1. As applicable to SGST Act

Section 151(1) of the Goods and Service Tax Act, 2016 provides that where any semi-finished goods had been despatched from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of earlier law prior to the appointed day and such goods after undergoing manufacturing processes (herein after referred to as the “said goods”) are returned to the said place of business on or after the appointed day, no tax shall be payable if the said goods are returned to such place within six months from the appointed day.

The first proviso to this sub-section states that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period not exceeding two months.

Further, the second proviso provides that tax shall be payable by the person returning the said goods if such goods are liable to tax under this Act and are returned after a period of six months or the extended period, as the case may be, from the appointed day. The third proviso further states that tax shall be payable by the person despatching the goods if such goods are liable to tax under this Act, and are not returned to him within a period of six months or the extended period, as the case may be, from the appointed day.

As per forth proviso, the person despatching the goods may, in accordance with the provisions of the earlier law, transfer the said goods to the premises of any registered taxable person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

Section 151(2) provides that the provisions of sub-section (1) shall apply only if the person despatching the goods and the job worker declare the details of the goods held in stock by the job worker on behalf of the said person on the appointed day in such form and manner and within such time as may be prescribed.

Finished goods removed for carrying out certain processes and returned on or after the appointed day

  1. As applicable to CGST Act

Section 152 of the Goods and Service Tax Act, 2016 provides that where any excisable goods manufactured in a factory had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of earlier law prior to the appointed day and such goods, after undergoing tests or any other process (herein after referred to as the “said goods”) are returned to the said factory on or after the appointed day, no tax shall be payable if the said goods are returned to the said factory within six months from the appointed day. The first proviso to this section provdes that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period of two months.

Further, the second proviso states that tax shall be payable by the person returning the said goods if such goods are liable to tax under this Act and are returned after a period of six months or the extended period, as the case may be, from the appointed day. Also, it has been provided that the manufacturer may, in accordance with the provisions of the earlier law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

  1. As applicable to SGST Act

Section 152 of the Goods and Service Tax Act, 2016 provides that where any goods had been despatched from the place of business without payment of tax for carrying out tests or any other process, to any other premises, whether registered or not, in accordance with the provisions of earlier law prior to the appointed day and such goods, after undergoing tests or any other process (herein after referred to as the “said goods”) are returned to the said place of business on or after the appointed day, no tax shall be payable if the said goods are returned to such place within six months from the appointed day.  The first proviso to this section states that the aforesaid period of six months may, on sufficient cause being shown, be extended by the competent authority for a further period not exceeding two months. Further, as per second proviso, tax shall be payable by the person returning the said goods if such goods are liable to tax under this Act and are returned after a period of six months or the extended period, as the case may be, from the appointed day.

As per third proviso to section 152, the person despatching the goods may, in accordance with the provisions of the earlier law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

 

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