GST – Job Work under GST
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 13-8-2016
Editorial Note
Model GST law has provided special procedure for removal of goods from principal manufacturer to job worker and return from job worker to principal manufacturer subject to certain conditions and limitations. This article aims at enlightening readers about the provisions related to job work.
Introduction
The definition of supply is very wide and had covered almost all sorts of transactions within its ambit. Material sent for job work is also covered under supply. Hence, GST would be payable on material sent for job work. However, law has kept this special transaction into consideration while drafting and thus it provides for special procedure for removal and receipt of goods sent on job work.
Meaning of Job work
“Job work” means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression “job
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work from one job worker to another job worker without payment of duty.
Time limit for receipt of goods back from job worker
Section 43A which provides for special procedure for removal of goods on job work does not specify any time limit for receipt of goods back However, another provision contained in clause 16A specifies time limit for receipt of goods. Accordingly, inputs should be received back within the period of 180 days of receipt of goods by job worker. Further, this time limit in respect of capital goods is 2 years.
Treatment to goods received back from job worker
After completion of job-work, Principal may either (a) 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 (b) 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 ma
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he said inputs, after completion of job-work, are received back by him within one hundred and eighty days of their being sent out:
The “principal” shall be entitled to take credit of input tax on inputs even if the input are directly sent to a job worker for job-work without their being first brought to his place of business, and in such a case, the period of one hundred and eighty days shall be counted from the date of receipt of the inputs by the job worker.
Input tax credit of capital goods sent to job worker –
The “principal” shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax on capital goods sent to a job-worker for job-worker for job-work if the said capital goods, after completion of job-worker for received back by him within two years of their being sent out.
The “principal” shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job-work wit
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spect of goods sent to job worker
Presently, a manufacturer can sent material for job work without payment of excise duty. As per Model Law if inputs or/ and semi-finished goods were sent for job work prior to introduction of GST law and were lying with the job worker, declaration shall be submitted by both manufacturer and job worker within specified period. The goods can be brought back to place of Principal manufacturer within six months without payment of tax. However, this period of six months can be extended by Commissioner for period of two months. If the material is not returned within six months (or further two months if extension is granted), tax will be payable by job worker or manufacturer.
Transitional provisions in respect of finished goods sent for test purpose
As per Model Law if finished goods were sent out for test or further process prior to introduction of GST law and were lying outside, these can be brought back within six months from date of commencement of GST
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