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GST UPDATE ON JOB WORK

GST UPDATE ON JOB WORK

GST UPDATE ON JOB WORK

 

Under GST regime, the definition of “Job work” is given in section 2(68) of CGST Act, 2017 which reads as follows:-

(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;

 Therefore, the definition of job work is very wide so as to cover any treatment or process undertaken by a person on goods belonging to another registered person.

Further, section 143 of CGST Act prescribes that a registered person 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. Thus, when any "inputs or capital goods" is sent for job work, Delivery Challan should be prepared in triplicate containing details specified in CGST Rules, 2017. Registered principal will also have to give intimation for sending goods for job work and file quarterly return under form ITC-04.

 

It is worthwhile to mention here that any "inputs" or "capital goods" may be sent on job work. The definitions of inputs and capital goods is very wide so as to cover all the business assets of a person. Further, since the definition of job work uses the words ‘any treatment or process’, its scope becomes extensive. Furthermore, the person sending the goods out for job work (i.e. Principal), has to be a registered person, and the job worker may or may not be a registered person, which again widens the scope of the provisions under job work. As a result, any goods given for any process shall be considered as job work and all the provisions related to job work as mentioned in the act shall apply.

 

Now, take a case, any car or laptop is sent for repairing process by a registered person. This will duly fall in the definition of job work as the definition says "any process applied on any goods belonging to any other registered person". Therefore, if the definition of job work is taken in literal sense then, this may cause further hardships on registered persons as any goods, for example, car, computer, laptop, mobile, etc given for repairing shall also be considered as job work. Accordingly, by taking such an interpretation; if these minor repair works are also considered as job work; it will be almost impossible to comply with the procedural formalities associated with job work like giving intimations, filing ITC-04, etc. Therefore, the clarification on this issue is the need of hour in order to avoid any litigation in future.

 

The content of this GST update is for educational purpose only and not intended for solicitation.

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