Circular No.ES/ 243 / 2018-19 9th October, 2018
VERY URGENT & IMPORTANT
To: Members of the Council
Sub : “JOB-WORK” RELATED PROVISIONS & COMPLIANCE UNDER GST LAWS
You may be aware that, job work is an integral feature of the manufacturing industry. Manufacturers usually outsource a portion of their activities to a third person. This turns out be cost-efficient and helps them to be more productive by focusing on their core activities. A large number of industries find it difficult to complete the entire process of production or manufacturing activity on their own therefore, the industry depends on outside support for carrying out the activities.
Under GST, special provisions have been provided for removal of goods for job-work and receiving back the goods after processing from the job-worker without the payment of GST. The benefit of these provisions shall be available both to the principal and the job worker. However responsibility of tax compliance lies with the 'principal'.
We understand that job-working (third party processing) is integral part of our textile industry and majority of our members might be involved in / undertaking job-work as part of your business processes.
Given here-below are some of the important points for you to note and comply -
(a) Legal implication:
- Principal manufacturer while sending goods to job-work has to comply with provisions of Section 143(1) of CGST Act, 2017 and relevant rules;
- Goods means inputs or capital goods (sent without payment of tax to job-worker);
- The goods may be sent from one job-worker to another or may return to the principal manufacturer;
- The goods sent to job-worker should return within 1 year (for inputs) and 3 years (capital goods);
- Principal manufacturer is responsible for keeping proper records of movement of goods for job-work processing;
- He has to prepare a ‘Delivery Challan’ in the prescribed format. Challan should contain following details:
- Date and number of the delivery challan;
- Name, address and GSTIN of the consigner and consignee;
- HSN code, description and quantity of goods;
- Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTGST separately;
- Place of supply and signature.
- Details of the challans must be reflected in Form GSTR-1. Finally, details of challans must also be filed through Form GST ITC – 04.
- Declaration in form ITC-04 is required to be filed on or before 25th day of subsequent month from end of the relevant quarter;
Under form GST ITC – 04, following details are to be provide:
- Goods dispatched to job-worker;
- Goods received from job-worker;
- Goods send from one job-worker to another job-worker.
- ITC-04 is filed on quarterly basis;
- CBIC had extended the due dates for filing ITC-04 for period July-17 to June-18. The due date was 30th September, 2018;
- One who has not filed, can still file the declarations for all 4 quarters;
- Currently, a late filing fee has not been prescribed but the same may be notified at any time in future.
(c) Consequences of non-compliance:
- Movement of goods from Principal manufacturer to job-worker and further / return shall be considered as supply;
- GST shall be payable on transactions considered as ‘supply’;
- Interest shall be payable on delayed payment of GST liability (currently, interest is charged at 18% p.a.);
- Penalty under the law for non-compliance shall also be levied.
We once again would like to inform you to kindly file your ITC-04 every quarter on or before 25th of the succeeding month of the quarter. Currently, a late filing fee has not been prescribed but the same may be notified at any time in future.