ITC in respect of

NOTE:-
For job work, input includes
intermediate goods arising from in GST Manufacture = processing of raw material or inputs in any manner
any treatment or process carried – Explanation that results in the emergence of a new product having a distinct
out on inputs by the principal or to section 143 name, character, and use, and the term manufacturer shall be
the job worker of CGST Act. construed accordingly.

Section 19: prescribes

provisions relating to taking ITC Rule 45 of CGST Rules: specifies
Section 143: procedure for Meanings
in respect of inputs sent for job conditions and restrictions in
removal of goods for job
Inputs/capital goods respect of inputs and capital
work. work w/o payment of tax.
can be sent to job goods sent to job worker.
worker from the place
of business of
principal.

143 (1)
Explanation Meaning of Principal:- Principal’ for
to 19(7) job work provisions means a Meaning of Job Work:- Job work”
Goods can be sent directly to registered person who sends any means undertaking any treatment or
job worker’s place from place inputs and/or capital goods, without process by a person on goods
of supplier of those goods, payment of tax, to a job worker for belonging to another registered person,
without bringing them at the place job-work and from there and the expression “job worker” shall
of business of principal subsequently sends to another job be construed accordingly – section
worker and likewise – section 143(1)
2(68) of the CGST Act
Conditions of CGST Act and Explanation to
section 19(7) of CGST Act.
The principal shall, subject to such conditions and restrictions
ITC of inputs as may be prescribed, be allowed ITC on capital goods sent
invoice of supplier should be in name and capital to a job worker for job work
The definition of job work makes it clear that the term job
of buyer (Principal), and the name and goods sent for
work can be used only when goods are sent by another
address of the job worker should be job work: Registration requirements for Job
registered person. The person sending goods for job
mentioned as the consignee. work is termed as ‘Principal.’ He should be a registered worker: The definition of job work uses
Section 19 (4): person the term ‘process by a person.’ Thus
principal shall issue Delivery Challan
the job worker needs not to be
under rule 45 of CGST Rules and send it The principal shall be entitled to take credit of input tax on
registered under GST.
directly to the job worker. capital goods even if the capital goods are directly sent to a
job worker for job work without being first brought to his place
Imported goods can be sent from the of business.
customs station of imports to the place Section 19 (5):
of the job worker principal should prepare
Delivery Challan and send it to job worker
Analysing Section
– Para 8.4(iv)
Section 19 (3): • Where the inputs sent for job work are not received back by the principal • Job worker need not be registered under GST if his aggregate
of CBI&C and relevant rules turnover is less than 20 lakhs per annum (10 lakhs per annum
circular No. after completion of job work or otherwise or are not supplied from the place
of business of the job worker within one year of being sent out, it shall be in case of special category States), whether he supplies such
38/12/2018
dated 26-3- deemed that such inputs had been supplied by the principal to the job worker on service within the State or inter-state – Para 6 of CBI&C
2018. Section 19(1): the day when the said inputs were sent out circular No. 38/12/2018 dated 26-3-2018.
Value of goods supplied by principal is not includible in the value of
Section 19 (2): • Provided that where the inputs are sent directly to a job worker, the period of one Job worker’s aggregate turnover. His aggregate turnover consists of
year shall be counted from the date of receipt of inputs by the job worker. job work charges and value of own material used

The “principal” shall, subject to

such conditions and restrictions The “principal” shall be entitled to
as may be prescribed, be take credit of input tax on inputs even
entitled to take credit of input if the inputs are directly sent to a
job worker for job-work without Rule 45(3): The details of challans in respect of goods dispatched
tax on inputs sent to a job-
their being first brought to his to a job worker or received from a job worker during a quarter shall
worker for job-work
place of business be included in Form GST ITC 04 furnished for that period on or
before the twenty-fifth day of the month succeeding the said quarter
or within such further period as may be extended by the
Commissioner by notification in this behalf. Intimation of every job
worker or every dispatch to job worker is not required – Para 8.4(vi)
of CBI&C circular No. 38/12/2018 dated 26-3-2018. Contents of Delivery Challan – The delivery challan, serially numbered should be issued at
the time of removal of goods for transportation, containing following details
–first and second
Rule 45(1) Delivery challan for sending goods Rule 55(1) of
proviso to rule (i) date and number of the delivery challan
for job work: CGST Rules-
45(1) of CGST (ii) name, address and GSTIN of the consigner, if registered
Rules inserted (iii) name, address and GSTIN or UIN of the consignee, if registered
Endorsement of the Challan: • For transportation of inputs or capital
w.e.f. 23-3-2018 (iv) HSN code and description of goods
goods for job work, a delivery challan
(v) quantity (provisional, where the exact quantity being supplied is not known)
• The job worker, instead of issuing his own shall be issued by principal.
(vi) taxable value
Challan, can endorse the Challan issued • Delivery Challan shall also be issued
Rule 45(2) (vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory
by the principal to another job worker, when the material is sent directly to the
tax or cess, where the transportation is for supply to the consignee
indicating there in the quantity and place of job worker from the place of Contents of Delivery
(viii) place of supply, in case of inter-State movement, and
description of goods where the goods are supplier Challan: The Challan
(ix) signature –
sent by one job worker to another or are issued by the principal to
returned to the principal. the job worker shall contain
• The Challan endorsed by the job worker the details specified in Rule
may be further endorsed by another job 55
worker, indicating there in the quantity
and description of goods where the
– rule 55(3) – rule 55(2) Delivery challan to be in triplicate – The delivery challan shall be prepared in triplicate,
goods are sent by one job worker to
in case of the supply of goods, with the following marking –
another or are returned to the principal
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE
Electronic way bill for sending material for job work and its return –
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER, and
Where goods are being transported on a delivery challan in place of the invoice, the same
shall be declared in e-way bill issued under rule 138. (c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER

• Such an e-way bill is required in case of inter-state supply for job work, even if the
value of consignment is less than Rs 50,000 – the first proviso to rule 138(1) of CGST
Rules.
• E-way bill can be generated either by principal or job worker – third proviso to rule
138(1) of CGST Rules.
• If a job worker is unregistered, the e-way bill should be generated by principal. It has
been reiterated in Para 8.3 of CBI&C Circular No. 38/12/2018, dated 26-3-2018.
• In case of material sent for job work or returned after job work, the ‘value’ indicated
in the e-way bill should be inclusive of the value of goods.
 Section 143
if goods = not returned (within one year in case of inputs of CGST
and three years in case of capital goods), the inputs and Act
capital goods shall be deemed to have been supplied by
principal to the job worker on the day when such inputs
or capital goods are sent out to the job worker.

• Thus, if inputs or capital goods are not returned

within one/three years, tax is payable by principal
with interest from the date on which goods were section 143(2) of the Rule 45(4): Payment of tax with interest if inputs or capital
sent for job work. CGST Act. goods are not returned within the prescribed period
He should raise a tax invoice for that purpose and include – If inputs or capital goods are not returned within the
it in his return for that period. period prescribed in section 143 (one or three years), the
supply shall be declared in form GSTR-1. (Tax with
• -If the goods are returned by job workers after Section 143(5) of
CGST Act. applicable interest shall be paid Tax with interest is
one/three years, the job worker will be treated as
payable if goods are not returned within one/three years.)
supplier and will be liable to pay GST – Para 9.5 of The responsibility for
CBI&C circular No. 38/12/2018 dated 26-3-2018. accountability of the goods,
including payment of tax
thereon shall lie with the
“principal” –
– proviso to section 143(1) of CGST • Where the Capital goods sent for job work are not received back by the
Act inserted vide CGST principal within three years of being sent out, it shall be deemed that such
(Amendment) Act, 2018 [This capital goods had been supplied by the principal to the job worker on the
amendment notified and made day when the said capital goods were sent out:
effective on 1-2-2019].
Provided that where the capital goods are sent directly to a job worker, the
period of three years shall be counted from the date of receipt of capital goods
by the job worker.
The period of one year or three
years can be extended by
Commissioner for a further Section 19 (1) to Section 19(5)
period of one year or two years
respectively on sufficient cause
being shown Any waste and scrap generated
during the job work may be Section 19 (6):
supplied by the job worker directly
from his place of business on
payment of tax

if such job worker

Analysing Section 19 and
is registered Special provisions relating to moulds and dies, jigs and fixtures, or tools:
applicable CGST Rules
Any waste and scrap The provision of returning goods within one/three years is not applicable to
generated during the job Section 19 (7): moulds and dies, jigs and fixtures, or tools.
waste and scrap if such job worker work may be supplied by the These may be retained at the place of job worker Moulds, tools, and dies are not
arising during job work is not registered principal required to be returned to Principal – Para 9.5 of CBI&C circular No. 38/12/2018
dated 26-3-2018. Thus, the job worker can sell them as scrap on payment of
GST if he is registered. If he is not registered, GST can be paid by ‘principal’
on such scrap.
Place of Supply:-
The Invoice may be
issued by the
principal If principal = in Punjab , job worker = in Haryana, Supply is of principal and not of job worker –

(principal while selling scrap should charge IGST if the recipient is The supply is of principal made from a place of job worker,
located in Haryana or any other State.) It is not supply made by job worker – Para 7 of CBI&C
circular No. 38/12/2018 dated 26-3-2018. GST is
If recipient of scrap= in Punjab, the principal will charge SGST and
Hence, invoice and the e-way bill should be issued by principal payable.
CGST
and not by the job worker
– Para 9.4(iii) of CBI&C circular No.
38/12/2018 dated 26-3-2018.

If such supply is in India,

If the goods are sent from one job worker Supply of finished After job work, the finished goods
to another job worker, the Challan may be Finished
Sending goods by one goods from Job (inputs after job work or capital goods)
issued either by the principal or the job
job worker to another Goods worker’s place can be sent directly from the place of
worker sending the goods to another job
job worker, instead of bringing them
worker.
back to place of business of ‘principal.’

Job Work
Completed

If such supply is not in India,

Goods returned
to Principal

Such goods can also be

exported directly from the
place of job worker, either
The goods shall not be permitted to be supplied from
on payment of GST or
the place of business of a job worker in terms of clause
without payment of GST
(b) unless the “principal” declares the place of
business of the job-worker as his additional place
If a job worker is
of business
registered under GST,
then the ‘principal’ is not except in a case – – proviso to
required to declare the section
place of job worker as an (i) where the job worker is registered under 143(1) of
additional place of section 25 of CGST Act; or CGST Act.
business. (ii) where the “principal” is engaged in the
supply of such goods as may be notified – section 143(1)(b) of the
by the Commissioner in this behalf CGST Act. – reiterated in
CBI&C Circular No.
88/07/2019-GST dated 1-2-
2019