Background on Job-work Procedure
To begin with we better must be clear with who is Job-worker and what does Job-work actually mean as per the provisions of The Central Goods and Services Act, 2017 (hereinafter to be referred as 'The Act'). Section 2(68) of The Act, defines Job-work as any treatment or process undertaken by a person on goods belonging to another Registered Person. Therefore Job-worker will be the one who undertakes any treatment or process on goods belonging to Principal.
As per Section 143 of The Act, a Registered person (Principal) may send any Inputs or Capital Goods, without Payment of Tax, to a Job-worker for Job-work and from there subsequently to another Job-worker and likewise.
However, both, Inputs and Capital Goods are either to be brought back to the Principal's Place of Business or should be supplied from the Place of Business of Job-worker within One Year, of their being sent out if they are Inputs, and within Three Years, of their being sent out if they are Capital Goods.
It must be noted that Inputs as mentioned above can be bought back as such, if Job-work procedure is not undertaken on them.
Abovementioned time limits are not applicable to moulds and dies, jigs and fixtures, or tools which are sent to Job-worker.
Now the question is what if Inputs and Capital Goods are not brought back or supplied from the Place of Business of Job-worker within the time as mentioned above? If this happens to be the case, it shall be deemed that such inputs had been supplied by the Principal to the Job-worker on the day when the said Inputs were sent out. In this very situation, such transaction would be added to Outward Supply in GSTR-3B and in GSTR-1 as well for the month in which such deeming provision activates. It must also be noted that Interest on this transaction will also be payable as the Time of Supply will be the date on which goods were sent for Job-work and Taxes will be paid in the month when deeming fiction occurs.
Goods can be supplied directly from the Place of Business of Job-worker only if the Goods to be Supplied are those which are Notified by the Commissioner or the Job-worker is registered under The Act. In this very case if the Principal wants to supply the Goods from the Place of Business of Job-worker and where Job-worker is not registered under The Act, Principal have to declare the Place of Business of Job-worker as his Additional Place of Business.
Any Scrap and Waste generated during the Job-work process may be supplied directly from the Place of Business of Job-worker only if he is Registered under The Act.
The Principal is responsible for keeping proper accounts and records of Inputs and Capital Goods sent to and received back from the Job-worker.
Issuance of Challan
Inputs or Capital Goods can be sent at the Place of Business of Job-worker either from Principal's Place of Business or directly from Supplier's Place of Business, without payment of Tax on the cover of a challan.
As per Rule 55 of The Central Goods and Services Tax Rules, 2017 (hereinafter to be referred as "The Rules") Challan must contain following particulars,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If goods are issued from one Job-worker to another or are returned to the Principal, Challan issued by the Principal may be endorsed by the previous Job-worker indicating therein the quantity and description of Goods sent.
The Challan shall be prepared in triplicate, for Consignee, Consignor, and Transporter.
Here, it may be a difficult task to determine the Taxable Value of the Goods if Inputs are stocked in Bulk which might have been procured from various Local and Interstate suppliers at varied rates, and such goods are sent for Job-work in number of consignments. As mentioned above Principal is the one responsible for proper accounting of Inputs and Capital Goods sent for Job-work, thus he must ensure proper mechanism to determine the Taxable Value of Goods sent for Job-work.
Total Number of Challans issued in the month are to be disclosed in Table 13 of the GSTR-1 for the period under consideration.
Quarterly Return - FROM GST ITC-04
FORM GST ITC-04 is to be filed by those Manufacturers (Principal) who send their Inputs or Capital Goods for Job-Work Process. FORM GST ITC-04 is to be filed quarterly, it is to be filed on or before the twenty-fifth day of the month succeeding the said quarter, however due date has been extended vide Notification Number 78/2018 - Central Tax dated 31st December, 2018 to 31st March, 2019 for the period beginning from 01st July, 2017 to 31st December, 2018.
FORM GST ITC-04 contains the details of challans in respect of Inputs and Capital Goods dispatched to a Job-worker or received from the Job-worker.
One must note that details of Goods sent from one Job-worker to another are NOT required to be disclosed in FORM GST ITC-04 which was required earlier (omitted vide Notification Number 74/2018 - Central Tax dated 31st December, 2018), also where one-to-one correspondence between goods sent for Job-work and Goods received back after Job-work is not possible, references of Original Challan date and Challan Number is not required to be disclosed in the return.
Separate details are required to be maintained with respect to quantity received from Job-worker to whom such goods were sent and with respect to quantity received from Job-worker other than the Job-worker to whom such goods were sent, also where Goods are supplied directly from the Place of Business of Job-worker corresponding details of Invoice Number and Invoice Date is to be mentioned in FORM GST ITC-04.
One crucial thing to note is that in FORM GST ITC-04 Taxable Value is to be provided only for Goods sent for Job-work and is Not required to be disclosed when such Goods are sent back to Principal.
Concluding Note
Government has given an opportunity to file FORM GST ITC-04 which Taxpayers should not waste, also non-compliance of law will result in issuance of Qualified Opinion by GST Auditor and levy of Late Return Filing Fee. This Return has already gone through with some major changes in the past and current notified format seems practical as well.
CAclubindia
