Section 143(1)

Registered Person^[2(94)] (i.e. “principal”) may

under intimation subject to such conditions as may be prescribed in Rule 45

send any inputs^[2(59)] or capital goods^[2(19)], without payment of tax, to a job worker for job work^[2(68)]

and from there subsequently send to another job worker and likewise,

Meaning of Principal for section 143

Para 2 of Circular No. 38/12/2018-GST dt. 26-03-2018

RP on whose goods (inputs or Capital Goods) job work is performed is called the “Principal” for section 143.

Principal who is Register person may, without payment of tax, send inputs or capital goods to a job worker for job work and, if required, from there subsequently to another job worker and so on.

Meaning of intimation

Rule 45(3)

Details of challans in respect of goods dispatched to a job worker or received from a job worker during a quarter shall be included in GST ITC-04

GST ITC-04 will serve as the intimation as clarified by Para 8.4(vi) of Circular No. 38/12/2018-GST dt. 26-03-2018.

Explanation to Section 143

For the purposes of job work, input includes

intermediate goods arising from any treatment or process carried out on the inputs by principal or the job worker.

Section 143(1)(a)

Principal shall bring back such

inputs after completion of job work or otherwise within 1 year, or

Capital Goods other than moulds and dies, jigs and fixtures, or tools within 3 years,

of their being sent out,

to any of his place of business, without payment of tax.

After processing of goods, job-worker may send back goods to the Principal without payment of tax.

Section 143(1)(b)

Principal shall supply such

inputs, after completion of job work or otherwise within 1 year or

Capital Goods other than moulds and dies, jigs and fixtures, or tools within 3 years

of being sent out

from the place of business of a job worker

on payment of tax within India, or

with or without payment of tax for export

Proviso - Principal shall declare Job worker’s place as his additional place of business

Principal shall not supply the goods from job worker’s place

unless principal declares job worker’s place as his additional place of business except where

(i) job worker is registered u/s 25; or

(ii) principal is engaged in supply of such goods notified by Commissioner.

Para 2 of Circular No. 38/12/2018-GST dt. 26-03-2018

On completion of the job work (by the last job worker), the principal shall

either bring back the goods to his place of business or

supply (including export) the same directly from the place of business/premises of the job worker

within

one year in case of inputs or

three years in case of capital goods (except moulds and dies, jigs and fixtures or tools).

Para 3 of Circular No. 38/12/2018-GST dt. 26-03-2018

It may be noted that the responsibility for sending the goods for job work as well as bringing them back or supplying them has been cast on the principal.

Para 7 of Circular No. 38/12/2018-GST dt. 26-03-2018

It is clarified that the supply of goods by the principal from the place of the job worker will be regarded as supply by the principal and not by the job worker as specified in section 143(1)(a).

[1][Proviso to section 143(1)

Period of 1 year and 3 years may, on sufficient cause being shown,

be extended by the Commissioner for a further period not exceeding 1 and 2 years respectively.]

The provision of return of goods or direct supply is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job worker.

Section 143(2)

The responsibility for keeping proper accounts for the inputs or CG shall lie with the principal.

Para 3 of Circular No. 38/12/2018-GST dt. 26-03-2018

Responsibility of keeping proper accounts of the inputs and capital goods sent for job work lies with the principal.

Rule 45(1)

The inputs, semi-finished goods or capital goods shall be sent to the job worker

under the cover of challan issued by the principal,

including where such goods are sent directly to a job-worker

Where goods are sent from one job worker to another job worker

Where goods are sent from one job worker to another job worker,

challan may be issued by

the principal or

the job worker sending the goods to another job worker:

1^st Proviso = Endorsement of Original Challan by Job Worker for further supply

challan issued by the principal may be endorsed by the job worker,

indicating therein quantity and description of goods where the goods are

sent by one job worker to another or

are returned to the principal:

2^nd Proviso - Original Challan may further be endorsed by another Job Worker for further supply

challan endorsed by the job worker may be further endorsed by another job worker,

indicating therein the quantity and description of goods

where the goods are

sent by one job worker to another or

returned to the principal]

Rule 45(2)

challan issued by the principal to the job worker

shall contain the details specified in rule 55.

Rule 45(3)

Details of challans in respect of goods

dispatched to a job worker or

received from a job worker [2][***]

[3][during a specified period]

shall be included in GST ITC-04 furnished for that period

Time Limit of ITC-04

on or before 25 day of the month succeeding [4][the said period].

Extension of Time Limit by commissioner

[5][or within such further period as may be extended by the Commissioner by a notification.

Provided that any extension of the time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.]

For all extended date of ITC-04, please refer notification

[6][Explanation to Rule 45(3)

For this sub-rule, “specified period” shall mean.-

(a) Half year in respect of a principal whose aggregate turnover during the immediately preceding FY exceeds Rs.5 Cr; and

(b) a FY in any other case.”]

Period of ITC-04 = Quarterly, Half yearly or yearly

Upto 30-09-2021, ITC-04 was required to be filed quarterly.

From 01-10-2021, ITC-04 is required to be filed as follows

(i) Half yearly return for RP’s whose AT in preceding FY > Rs.5 Cr

(ii) Yearly return for other RPs.

Notification No. 38/2019-Central Tax dt. 31-08-2019

RP is not required to furnish ITC-04 for July, 2017 to March, 2019

In exercise of the powers conferred by section 148, CG notifies that

RPs required to furnish details of challans in ITC-04 u/r 45(3) read with section 143

shall not be required to furnish ITC-04 u/r 45(3)

for the period July, 2017 to March, 2019:

1^st Proviso – Such RPs shall furnish details of goods not received back from job worker for the said period

the said persons shall furnish the details of all the challans of goods dispatched to a job worker in the period July, 2017 to March, 2019 but not received from a job worker or not supplied from the place of job worker as on the 31st March, 2019, in serial number 4 of ITC-04 for the quarter April-June, 2019.

Section 143(3) read with Rule 45(4)

If inputs sent for job work

are not received back after completion of job work or otherwise as per section 143(1)(a) or

are not supplied from job worker’s palace as per section 143(1)(b)

within a period of 1 year of their being sent out,

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 to job worker

and the said supply shall be declared in GSTR-1

and principal shall pay tax + applicable interest.

Same provisions are given in Section 19(3). For questions please refer section 19(3)

Section 143(4) read with Rule 45(4)

If Capital Goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work

are not received back by the principal as per section 143(1)(a) or

are not supplied from job worker’s place as per section 143(1)(b)

within a period of 3 years of their being sent out,

it shall be deemed that such CG had been supplied by the principal to the job worker

on the day when the said capital goods were sent out to job worker

and the said supply shall be declared in GSTR-1

and principal shall pay tax + applicable interest.

If inputs or Capital Goods (other than moulds and dies, jigs and fixtures or tools) are neither received back by the principal nor supplied from the job worker’s place of business within the specified time period, the inputs or Capital Goods (other than moulds and dies, jigs and fixtures or tools) would be deemed to have been supplied by the principal to the job worker on the day when such inputs or capital goods were sent out to the first job worker

Same provisions are given in Section 19(6). For question please refer section 19(6)

Para 3 of Circular No. 38/12/2018-GST dt. 26-03-2018

If the time frame of 1 / 3 years for bringing back or further supplying the inputs / capital goods is not adhered to, the activity of sending the goods for job work shall be deemed to be a supply by the principal on the day when the said inputs / capital goods were sent out by him.

The date of supply shall be the date on which such inputs or capital goods were initially sent to the job worker. Further, interest for the intervening period shall also be payable on the tax.

Section 143(5)

Notwithstanding anything contained in sub-sections (1) and (2),

any waste and scrap generated during job work may be supplied by

the job worker directly from his place on payment of tax, if such job worker is registered, or

the principal, if the job worker is not registered.

Circular No. 38/12/2018-GST dt. 26-03-2018

Board clarifies the various issues raised as below

3

Essentially, sending goods for job work is not a supply as such, but it acquires the character of supply only when the inputs/CG sent for job work are neither received back by the principal nor supplied further by the principal from the place of job worker within 1/3 years of being sent out.

Responsibility for sending the goods for job work as well as bringing them back or supplying them has been cast on the principal.

5

Section 2(68) entails that the job work is a treatment or process undertaken by a person on goods belonging to another registered person.

Thus, the job worker is expected to work on the goods sent by the principal and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case.

Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work.

6

Section 143 are applicable to RP only. Thus, it is only a RP who can send the goods for job work under the said provisions.

Section 143 is optional for Principal

It may also be noted that RP (principal) is not obligated to follow the said provisions. It is his choice whether or not to avail or not to avail of the benefit of these special provisions.

6

Where Principal and Job worker are located in same state

Job worker is required to obtain registration only if his aggregate turnover in a FY exceeds the specified threshold limit in case both the principal and the job worker are located in the same State.

Where Principal and Job worker are located in different state

Requirement for registration flows from section 24(i) which provides for compulsory registration of suppliers making any inter-State supply of services.

However, exemption from registration has been granted in case the aggregate turnover of the inter State supply of taxable services does not exceed Rs.20 lakhs or Rs. 10 lakhs in case of special category States except Jammu & Kashmir in a FY vide notification No. 10/2017 – Integrated Tax dated 13.10.2017.

Therefore, it is clarified that a job worker is required to obtain registration only in cases where his aggregate turnover, to be computed on all India basis, in a FY exceeds the threshold limit regardless of whether the principal and the job worker are located in the same State or in different States.

Clarification has been given vide Circular No. 38/12/2018-GST dt. 26-03-2018

8.3

Legal Provision of E-way Bill for goods sent to job worker

Rule 138 provides that an e-way bill is required to be generated by every RP who causes movement of goods of consignment value exceeding Rs.50,000 even in cases where such movement is for reasons other than for supply (e.g. in case of movement for job work).

The third proviso to rule 138(1) provides that e-way bill shall be generated either by the principal or by registered job worker irrespective of the value of the consignment, where goods are sent by a principal located in one State/UT to a job worker located in any other State/ UT.

Explanation 1 to rule 138(3) provides that where the goods are supplied by an unregistered supplier to a registered recipient, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of the movement of goods. In other words, the e-way bill shall be generated by the principal, wherever required, in case the job worker is unregistered.

8.4

Clarification

On conjoint reading of the relevant legal provisions, following is clarified with respect to the issuance of challan, furnishing of intimation and other documentary requirements in this regard:

8.4(i)

Principal shall prepare in triplicate challan as per rules 45 and 55 for sending 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. GST ITC-04 will serve as the intimation as envisaged u/s 143.

8.4(ii)

In such cases, the goods may move under the cover of a challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. The same process may be repeated for subsequent movement of the goods to other job workers.

8.4(iii)

The job worker should send one copy of the challan received by him from the principal while returning the goods to the principal after carrying out the job work.

8.4(iv)

In this case, the goods may move from the place of business of the supplier to the place of the job worker with a copy of the invoice issued by the supplier in the name the principal wherein the job worker’s name and address should also be mentioned as the consignee, in terms of rule 46(o).

the principal shall issue the challan u/r 45 and send the same to the job worker directly in terms of para (i) above.

In case of import of goods by the principal which are then supplied directly from the customs station of import, the goods may move from the customs station of import to the place of job worker with a copy of the Bill of Entry and the principal shall issue the challan u/r 45 and send the same to the job worker directly.

8.4(v)

In case the goods after carrying out the job work, are sent in piecemeal quantities by a job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker.

9.4

(i) Supply of job work services

The job worker, as a supplier of services, is liable to pay GST if he is liable to be registered.

He shall issue an invoice at the time of supply of the services as determined in section 13 read with section 31. The value of services would be determined in terms of section 15 and would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal.

Whether the value of moulds and dies, jigs and fixtures or tools provided by the principal to the job worker would be included in the value of job work services.

Section 15(2)(b) provides that any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient will form part of the valuation for that particular supply, provided it has not been included in the price for such supply.

Accordingly, it is clarified that the value of such moulds and dies, jigs and fixtures or tools may not be included in the value of job work services provided its value has been factored in the price for the supply of such services by the job worker.

(ii) Time, value and place of Supply of goods by principal from job worker’s place

Since the supply is being made by the principal, it is clarified that the time, value and place of supply would have to be determined in the hands of the principal irrespective of the location of the job worker’s place of business/premises.

Invoice, LUT etc to be issued by Principal

Further, the invoice would have to be issued by the principal.

In case of exports directly from the job worker’s place of business/premises, the LUT or bond,, shall be executed by the principal.

Illustration: The principal is located in State A, the job worker in State B and the recipient in State C. In case the supply is made from the job worker’s place of business / premises, the invoice will be issued by the supplier (principal) located in State A to the recipient located in State C. The said transaction will be an inter-State supply. In case the recipient is also located in State A, it will be an intra-State supply.

9.5

Violation of conditions laid down in section 143

Provision of Section 143(3) & (4) applies

9.6

If such goods are returned by the job worker after the stipulated time period,

the same would be treated as a supply by the job worker to the principal and the job worker would be liable to pay GST if he is liable for registration.

It may be noted that if the job worker is not registered, GST would be payable by the principal on RCM u/s 9(4).

9.4

Refer Guide on Section 19 of CGST Act

9.4

Click here