Q 1. What is job-work?
Ans. Section 2(62) of the MGL provides that “job-work” means
undertaking any treatment or process by a person on goods belonging to another
registered taxable person and the expression “job-worker” shall be construed
accordingly. This definition is much wider than the one given in Notification
No. 214/86 – CE dated 23rd March, 1986 as amended, wherein job-work has been
defined in such a manner so as to ensure that the activity of job-work must
amount to manufacture. Thus the definition of job work itself reflects the
change in basic scheme of taxation relating to job-work in the proposed GST
regime.
Q 2. Whether goods sent by a taxable person to a job-worker
will be treated as supply and liable to GST? Why?
Ans. No. It will not be treated as a supply. In terms of provision
to Para 5 of Schedule I of the MGL the supply of goods by a registered taxable
person (principal) to job-worker, in terms of Section 43A, shall not be regarded
as supply of goods. Therefore, it can be inferred that no GST shall be
applicable on the goods supplied by the registered principal to a job-worker.
Q 3. Can a registered taxable person send goods without
payment of tax to his job-worker?
Ans. Yes. Section 43A of the MGL provides that the registered
taxable person (principal) can send the taxable goods to a job-worker for
job-work without payment of tax. He can further send the goods from one
job-worker to another job-worker and so on subject to certain condition. It may
be noted that provisions of Section 43A are not applicable if non-taxable or
exempted goods are proposed to be sent for job-work.
Q 4. Is a job-worker required to take registration?
Ans. Yes, as a Job-worker would be a supplier of services, he
would be required to obtain registration if his aggregate turnover exceeds the
prescribed threshold.
Q 5. Whether the goods of principal directly supplied from
the job-worker’s premises will be included in the aggregate turnover of the
job-worker?
Ans. No. It will be included in the aggregate turnover of the
principal.
Q 6. Can the principal supply the goods directly from the
premises of the job-worker without bringing it back to his own premises?
Ans. Yes but with a rider that the principal should have declared
the premises of such job-worker as his additional place of business or where
the job-worker is a registered person or where the goods have been notified.
Q 7. Under what circumstances can the principal directly
supply goods from the premises of job-worker?
Ans. The goods can be supplied directly from the place of business
of job-worker without declaring it as additional place of business in two
circumstances namely where the job-worker is a registered taxable person or
where the principal is engaged in supply of such goods as may be notified in
this behalf.
Q 8. What are the provisions concerning taking of ITC in
respect of inputs/capital goods sent to a job-worker?
Ans. In the MGL, aspects relating to taking input tax credit
in respect of inputs/capital goods sent for job-work have been specifically
dealt in Section 16A, which provides that the credit of taxes paid on inputs or
capital goods can be taken in the following manner:
Principal shall be entitled to take credit of inputs sent to
a job-worker if the said inputs, after completion of job-work are received back
in 180 days from the date of being sent out. In case the inputs are sent
directly to the job-worker, the date shall be counted from the date of receipt
of inputs by job-worker. Further an amount equivalent to the input tax credit
availed on such inputs has to be paid along with interest, in case the inputs
are not received back within the specified time. The credit can be reclaimed
when the inputs are actually received back.
Q 9. Are the provisions of job-work applicable to all
category of goods?
Ans. No. The provisions relating to job-work are applicable only
when registered taxable person intends to send taxable goods. In other words,
these provisions are not applicable to exempted or non-taxable goods or when
the sender is a person other than registered taxable person.