The amendments made in the provisions pertaining to job work and their comparison with respect to earlier GST law and in present scenario is summarised as follows:-
1. Earlier GST law provided that Commissioner may be special order and subject to conditions, permit a registered taxable person to send taxable goods without payment of tax to a job worker for job work. This indicated that every time, permission of Commissioner was required to be taken for sending goods for job work. This anomaly has been removed in the revised GST law which provides that a registered taxable person may under intimation and subject to conditions send any inputs or capital goods without payment of tax to job work. At present, under Rule 4(5) (a) of Cenvat Credit Rules, 2004 there is no requirement of intimation also. However, the undertaking is required under an alternative procedure of Notification 214/86-C.E. dated 25.3.1986 and as amended. However, while giving undertaking, intimation is also given for a particular job worker by the principal manufacturer. But there is no requirement in the present law. The same was required under earlier Rule 57F(2) of Modvat Credit Rules. It appears that the same mechanism is carried forward in the proposed GST regime.
2. The time limit for job work specified for inputs has been increased from 180 days to one year and that for capital goods has been increased from two years to three years. This increase in the time limit for job work is appreciated by trade and industry particularly for the capital goods. However, it is pointed that the definition of capital goods has undergone a substantial change and now goods that are capitalised in the books of accounts are to be treated as capital goods and consequently the enhanced time limit will be available only to those goods which are capitalised in the books of accounts.
3. There is drastic change in the provision regarding non-receipt of job-worked goods within the stipulated time period. As per old GST Law, where the inputs or capital goods were not received by the principal within the specified time frame, principal was required to pay amount equivalent to credit said input or capital goods along with interest. Moreover, there was also provision that the input tax credit paid may be re-claimed when the inputs/capital goods were received after expiry of prescribed period. Now, this provision has been completely changed. As per the revised GST Law, if the inputs/capital goods are not received back within the stipulated time or are not supplied from the job worker’s premises within the said prescribed time, it shall be deemed that such inputs/capital goods had been supplied by the principal to the job-worker on the day when the said capital goods were sent out. This means that the input/capital goods will be deemed to be supply for principal. It implies that principal has to pay GST after two years for inputs and after three years for capital goods but this duty payment will be considered on the date of supplying goods for job work. However, there is no express provision whether the job-worker will be able to claim credit of tax paid by the principal. Moreover, there might be practical difficulty in availing credit. Although, the invoice is to be raised in the current date and hence the time restriction for availing credit will not apply in such cases. But the department might not adhere to such analogy and there is bound to be litigation on such points. Also, it appears that the principal will be required to pay interest for delay in payment of tax which will serve as an additional burden to him.
4. A new provision has also been inserted so as to provide that any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax if such job worker is registered, or by the principal, if the job worker is not registered. This provision brings clarity as regards tax liability for waste and scrap generated during the course of job work in GST era. There is litigation on this point also in present regime because the department demand tax from principal but the waste and scrap is retained by job worker. Hence, the assessee contends that liability to pay duty on scrap is on job worker.
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