Job Work under GST

[Yatin Bhopi]

Dear expert,

We wish to send Product 'A' (e.g. 100kg) for job work. To get final product 'C' job worker will add Product B (50kg) on his own account (purchase by him) and he will raise tax invoice to us for his processing charges plus cost of Product 'B'. My query is:

Whether this transaction is in line with Job worker procedure under GST law( since 50% or raw material is procured by job worker himself)

[KASTURI SETHI]

Yes. There is no such restriction on Job worker. Job worker does job work for and behalf of the principal and the cost of product 'B' will be borne by the principal.

[Himansu Sekhar]

Correct view sir

[Yatin Bhopi]

Sir

if we see defination of job work under CGST act it says

(68) “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.

Can job worker use his goods for manufacturing in that much proportion i.e.1\3 in our case

[KASTURI SETHI]

When principal has made payment to job worker on account of material purchased and used by him for and on behalf of jobbee (principal), all goods (including inputs purchased by job worker) belong to principal. Pl. Note that when proper and due GST is paid in full to Govt. Procedure s are relegated to the background. In pre-GST, such practice was allowed. GST being a new levy, no action on account of procedure lapse will be taken against the assessee. I do not treat it even a procedures lapse.

[Yatin Bhopi]

thanks sir

[KASTURI SETHI]

Do you agree sincerely or just expressed thanks ?

[Yatin Bhopi]

Absulutly I agreed Sir.

[Nash Industries I Pvt Ltd]

As the person processing the goods is adding the material and manufacturing the product, he is a supplier of goods and not supplier of services. The tax is payable as goods classified under HSN and not as job work at 18%.

Regards

S.Ramaswamy

[Yatin Bhopi]

Dear Sir

He will raise saperate bill for goods and services

AI Summary

Job work under GST: materials bought by job worker treated as principal's goods if reimbursed; invoice for goods and service. Where the job worker purchases material but the principal reimburses and proper GST is paid, the purchased inputs and resultant goods are treated as belonging to the principal; the job worker may invoice separately for the goods component and processing services, and tax treatment should follow ownership and the nature of supply.