Sec 2(68) – Job Work

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Sec 2(68) – Job Work 2017-04-14T03:50:01+00:00
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    “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;

    Priya MadrechaPriya Madrecha
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    To start with, the expression “job work” refers to a “treatment” or “process”, which is undertaken by one person, who may or may not be registered, to another registered person.
    While treatment and processing are commonly understood as services, there is no implication that job work is purely services, or that goods would not be used for such treatment or processing. However, Schedule II of the CGST Act which specifies activities to be treated as supply of goods or supply of services, inter alia provides that any treatment or process which is applied to another person’s goods is a supply of services. Such a deeming fiction in respect of job work is given effect to, based on the primary objective of any job work, which is to provide a service.
    The following aspects need to be noted:
    •    Capital goods may be sent for job work, or for the purpose of carrying out the treatment or process.
    •    A job worker is free to effect inward supplies on his own account for carrying out the job work. The law does not require that goods applied for the treatment or process must also be sent by the registered person on whose goods the job work is undertaken.
    •    As regards the job worker per se, the law makes no insistence that such person must be a registered person.
    •    The law requires that the treatment or process undertaken by the job worker must be on goods belonging to “another” registered person.
    o    From the usage of the term “another” before “registered person”, it is clear that the law intends to segregate the units being different persons, or different registrations.  o The reference to the principal is made by using “another registered person” and not “another person”.
    o    It may be safely be understood that, if one unit of a company supplies goods for further processing to another unit of the same company, having a different registration from that of the supplying unit, the unit undertaking the processing activity can be treated as a job worker.

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