Sec 143 – Job work procedure

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Sec 143 – Job work procedure 2017-04-14T03:01:52+00:00
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  • Miloni ShahMiloni Shah
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    (1) A registered person (hereafter in this section referred to as the “principal”) 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 and from there subsequently send to another job worker and likewise, and shall,–
    (a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
    (b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
    Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case-
    (i) where the job worker is registered under section 25; or
    (ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
    (2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
    (3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.
    (4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.
    (5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.
    Explanation.–For the purposes of job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.

    Priya MadrechaPriya Madrecha
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    143.1.    Introduction
    This section provides for a special procedure to exempt supplies from payment of GST by  principal to job worker and return from job worker to principal subject to certain conditions and procedure.
    Meaning of job work and job worker: Section 2(68) gives the meaning of the term ‘job work’. As per the said provision, it means a person undertaking any treatment or processing of goods belonging to another registered taxable person. Any person who does such job work will be considered as “Job worker”.
    143.2.    Analysis
    Sending of inputs or capital goods to job worker
    This provision enables registered taxable person to send inputs / capital goods under intimation and subject to such conditions as may be prescribed to a job worker without payment of tax.
    It also provides that the inputs or capital goods can be sent from one job worker to another job worker as well without payment of any tax on such goods being sent.
    Receipt of inputs or capital goods from the job worker after job work or otherwise
    After the processing of goods or otherwise, the goods may be dealt with in any of the following manner by the principal:
    (a)    Brought back to any place of business without payment of tax and thereafter supplied,
    (i)    Within India on payment of tax;
    (ii)    For export with or without payment of tax;
    (b)    Supply from the place of business of job worker –
    (i)    Within India on payment of tax;
    (ii)    For export with or without payment of tax;
    Direct Supply of goods from job worker
    The goods can be supplied directly from the place of business of job worker by the principal only when the principal declares the place of business of the job worker as his additional place of business. However, the exceptions are – (i)     If job worker is registered under Section 25;
    (ii)      The principal is engaged in the supply of notified goods.
    Responsibility for accountability of Inputs / Capital Goods
    If the benefit under this section is availed, the principal is responsible and accountable for all the transactions between him and the job worker.
    The above chain can be represented as under:

    Inputs sent to Job Worker not received back with one year
    As per section 143(3), where the inputs sent for job-work are not received back by the “principal” after completion of job-work or otherwise or are not supplied from the place of business of the job worker as aforesaid within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job-worker on the day when the said inputs were sent out. Hence, the Principal would be liable to pay interest from the date inputs were sent out.
    Capital Goods Sent to Job Worker not received back with three years
    As per section 143(4), where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job-work are not received back by the “principal” or are not supplied from the place of business of the job worker as aforesaid within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job-worker on the day when the said capital goods were sent out. Hence, the Principal would be liable to tax along with pay interest from the date capital goods were sent out.
    Waste and Scrap generated at Job worker
    As per section 143(5), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax if such job worker is registered, or by the principal, if the job worker is not registered.
    Application of certain provisions of CGST Act, 2016 under IGST Act
    As per section 20 of the IGST Act, the provisions relating to job work would be applicable in case of IGST Act also.
    143.3. Comparative review
    The term ‘job work’ has not been defined in the Central Excise Act or Customs Act but the same has been provided for in Notification No 214/86 C.E. dated 25.03.1986 and CENVAT Credit Rules, 2004.
    143.4. Related provisions
    In section 143 there is no specific reference to any other sections but there are other provisions where section 143 has been referred to:
    Section / Rule / Form      Description     Remarks
    Sub-section (68) of Section 2     Job work definition     The job work has been defined to mean undertaking any treatment or process.
    Section 19      Taking ITC in respect of inputs and capital goods sent for Job work     The condition and procedure has been prescribed.
    Section     22     –
    Explanation (ii)      Registration     The turnover of job work for principal should not be included in aggregate turnover of job worker
    143.5. FAQ
    Q1. Who shall undertake responsibility for keeping proper accounts under this provision and in case of contraventions?
    Ans. The principal would undertake the primary responsibility and accountability of the goods including payment of taxes if any.
    Q2.     Can goods be supplied from job worker’s place?
    Ans. Yes, this provision allows supply of goods from job worker’s premises but only on payment of taxes within India and without payment of taxes for export.
    Q3.     Whether any time period has been prescribed within which goods have to be returned to principal?
    Ans.  Yes, inputs are to be returned to Principal or supplied from the place of business of job worker within one year of their being sent out. .
    Q4.     Whether there is any time limit for capital goods also?
    Ans. Yes, capital goods, other than moulds and dies, jigs and fixtures, or tools sent for job work, are to be returned to Principal or supplied from the place of business of job worker within three years of their being sent out.
    143.6 MCQ
    Q1. The inputs and/ or capital goods may be sent by ……………………………to job worker under intimation and subject to such conditions as may be prescribed
    (a)    Taxable person
    (b)    Unregistered taxable person
    (c)    Registered person
    Ans.  (c) Registered person
    Q2.     The job workers are allowed to send such goods to other
    (a)    Manufacturers
    (b)    Traders
    (c)    Job workers
    (d)    All of the above
    Ans.  (c) Job workers
    Q3. Who will undertake responsibility and accountability for any contravention under this section?
    (a)    Principal
    (b)    Manufacturer
    (c)    Job worker
    (d)    No body
    Ans.  (a) Principal
    Q4.     What is the time limit within which inputs return to principal?
    (a)    365 days (One Year)
    (b)    180 days
    (c)    270 days
    (d)    2 years
    Ans.  (b) 365 days (One Year)
    Q5.     What is the time limit within which Capital goods have to be returned to principal?
    (a)    One Years
    (b)    Two Years
    (c)    Three years
    (d)    None of above
    Ans.  (d) Three years

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