As per section 2(88) of CGST Act 2017, “principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both.
As per section 2(68) of CGST Act 2017,“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.
As per schedule II of CGST Act 2017, any treatment or process which is applied to another person’s goods is a supply of services.
Therefore, the activity of job work is treated as supply of services and rate of services shall apply.
As per section 143 of CGST Act 2017, Principal may send any input or capital goods to a job worker without payment of tax and to another job worker subsequently.
However, following conditions need to be satisfied:-
If any input is being supplied, bring back the goods within 1 year of being sent out.
If any capital good is being supplied, bring back the goods within 3 year of being sent out
If any moulds and dies, jigs and fixtures, or tools are being supplied, there is no condition to bring back.
If any Input/Capital good is directly sent to a job worker the period of 1 year/3 year shall be counted from the date of receipt of Inputs/Capital goods by the job worker.
If goods not brought back within the specified time, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when they were sent out.
As per section 143 of CGST Act 2017, goods can directly be supplied from the place of business of a job worker on payment of tax within India or with or without payment of tax for export only if,
Principal declares place of business of a job worker as additional place of business except if job worker is registered under this act.
As per Explanation given in Section 22 of CGST Act 2017, the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal , and the value of such goods shall not be included in the aggregate turnover of the registered job worker.
Therefore, it can be interpreted that if goods are being supplied to unregistered job worker then the value of supply of goods will be included in the aggregate turnover of the unregistered job worker and liable to take registration if it exceeds Rs. 20 Lakh.
As per section 19 of CGST Act 2017, Input tax credit is allowed on Inputs/Capital goods sent to a job-worker for job work even if goods are directly sent to a job worker without being first bought to his place of business.
However all the conditions given in section 16 of CGST Act 2017 must be satisfied i.e:
He is in possession of tax invoice
He has received the goods (even if job worker receives the goods directly, shall be deemed to be received by principal )
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