What is Job work?
Section 2(68) of the CGST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘job worker’. The ownership of the goods does not transfer to the job worker but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods.
Documentation & Other Procedural Aspects
1. Where goods are sent by principal to the job worker: The principal shall prepare in triplicate, the delivery challan in terms of rules 45 and 55 of the CGST Rules, for sending the goods to a job worker. Two copies of the challan may be sent to the job worker along with the goods. The job worker should send one copy of the said challan along with the goods, while returning them to the principal.
2. Where the goods are sent directly by the supplier to the job worker: In this case, the goods may move from the place of business of the supplier to the place of business/premises of the job worker with a copy of the invoice issued by the supplier in the name of the buyer (i.e. the principal) wherein the job worker’s name and address should also be mentioned as the consignee, in terms of rule 46(o) of the CGST Rules. The buyer (i.e., the principal) shall issue the challan under rule 45 of the 7 CGST Rules and send the same to the job worker directly in terms of para (i) above.
3. Job-Work Returns:
a) Whether Job worker needs to issue a new delivery challan while returning the goods after job work?
Ans. No, not required to issue a new delivery challan. Job-worker can endorse the goods through the same delivery challan issued by the principal however he will mention the value of goods as value declared by principal plus job-work charges.
For example: if the value of goods sent by principal is Rs. 1,00,000/- and job-work charges are Rs. 10,000/-(inclusive of GST), the job worker will mention value as Rs. 1,10,000/- by showing bifurcation in his delivery challan. The challan should also mention the nature of processing done and the resultant product and quantity so arising out of it.
b) What is the value of the goods that should be mentioned while generating E-Way Bill for the movement of goods from the place of job-worker after job work?
Ans. E-Way Bill should be generated on the basis of consignment value. The consignment value of goods shall be the transaction value [i.e., sale value of the goods], determined in accordance with the provisions of section 15, declared in an invoice, a bill of supply or a delivery challan.
In the present case, the goods are being transported after job work and the transaction value u/s 15 of such goods includes even the job work services. Therefore, the value of the goods should even include the value addition due to job work (job work charges + tax thereon) and therefore “Cost of inputs + job-work charges + tax on job work charges = Value to be declared on the e-way bill” and accordingly said details should also be mentioned on the delivery challan accompanying the goods as mentioned in point (a) above.
This view has also been taken in “E-publication on e-way bill under GST” issued by The Institute of Chartered Accountants of India, Edition: February 2019.
c) In our view & opinion, there is no requirement to mention GST component in the e-way bill since this is not a supply per se but just goods coming back to the principal from the job-worker under the cover of a challan.
This is further supported by the fact that whenever we choose “job-work returns” as type of supply on the e-way bill portal, the supporting document for the same auto-populates itself as a “delivery challan” and the delivery challan which is the basis of this transportation does not contain any tax component.