GST Update on Anomalies in Job Work Procedure

Though the government has implemented the Goods and Service Tax Act in a full fledged manner, numerous practical problems are coming up with each passing day. One of such problems which is quite universal in present industrial scenario is the job work procedure. Sending goods on job work is a major area which needs attention and requires clarity keeping in view the feasibility of the procedure.
The job work provisions are contained in section 143 of CGST Act, 2017. The opening para of this section reads as follows:-
"143. (1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––
This section empowers the principal to supply the goods for job work. It uses the words "and from there subsequently send to another job worker and likewise". This language suggests that even for the purpose of movement of goods from the premise of one job worker to another job worker, principal has to issue the challan.
Also, the form GST ITC-04 which is the quarterly return in which the details of goods sent & received from job worker are to be filed; creates some ambiguity. At Serial no. 5 of this return, a table is produced which have the title as follows:- "Details of inputs/capital goods received back from job worker or sent out from business place of job-work". The second column of this table requires the following details:-
"Received back/sent out to another job worker/ supplied from premises of job worker"

Since this return is to be filed by the principal supplier only, this description indicates that challan in case of movement of goods from one job worker to another shall also be issued by the principal supplier only.

This view is also held up by a renowned speaker in the GST seminars conducted by him.
However, Rule 45 of CGST Rules, 2017 states that the inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker. This language suggests that in case the goods are directly sent to job worker, then too, the challan shall be issued by the principal. However, this rule does not have any specific mention of the case where the goods are sent from one job worker to another job worker.
Further, the Rule 55 of CGST Act, 2017 which prescribes the requirements for transportation of goods without issue of invoice uses words ‘consignor’ and ‘consignee’. This indicates that even the job worker can issue the challan in case of movement of goods from his premise to premise of another job worker. This shows that in such a case, the movement of goods shall be accompanied by the challan that needs to be issued by the first mentioned job worker and not by the challan issued by the principal.

Thus, provisions of rules and acts have improper language leading to conflicting interpretations. Therefore, the clarification should be given at the soonest. However, in case of conflict in the language contained in the Act and rule, Act shall always prevail over the rules in view of Supreme Court decision given in the case of ISPAT INDUSTRIES LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2006 (202) E.L.T. 561 (S.C.)]. Thus, the movement of goods in the given case should be on the basis of challan issued by the principal supplier. Thus, the same needs to be abided by until the procedure is simplified in future.

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GST Update on Anomalies in Job Work Procedure

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