Whether packing constitutes to job work under GST?

[Balaji Srinivasamurthy]

Dear experts,

I seek your valuable opinion on a situation where the goods sent by manufacturer for packing, shall be termed as job work as per Section 2(68) of CGST Act

[Sadanand Bulbule]

Plz refer CBIC Circular No. 38/12/2018 dated 26/03/2018 for job work clarification with reference to the conditions prescribed under Section 2[68] of the CGST Act.

It is held that, lebelling, packing and repacking using own material by the job worker for the goods belonging to the principal amounts to job work.

[YAGAY and SUN]

Sending manufactured goods for packing outside the factory area/manufacturing facility will tentamount to Jobwork activities. 

Types of Job Work

1. Processing Job Work – Activities such as cutting, welding, dyeing, packing, repacking.
2. Manufacturing Job Work – Assembly or creation of finished goods.
3. Repair or Maintenance Job Work – Fixing or maintaining machinery, parts.
4. Testing/Quality Control – Quality assurance functions performed on goods.

[KASTURI SETHI]

ANSWER IS YES.  

[Harshaditya Kabra]

Packing definitively constitutes job work under GST when it meets the criteria established in Section 2(68) of the CGST Act, 2017. The CBIC Circular No. 38/12/2018 provides clear and authoritative guidance that packing, labeling, and repacking activities, even when using the job worker's own materials, qualify as job work when performed on goods belonging to a registered principal.

Key Requirements for Packing to Qualify as Job Work:

1. Principal must be registered under GST

2. Goods ownership remains with principal during packing process

3. Packing constitutes treatment or process of the principal's goods

4. Proper documentation and compliance procedures must be followed

The treatment of packing as job work provides significant benefits including the ability to send goods without payment of tax (under Section 143 procedures), input tax credit availability, and streamlined compliance for the manufacturing sector. However, proper documentation and adherence to prescribed procedures are essential to avail these benefits and ensure GST compliance.

[Balaji Srinivasamurthy]

Dear experts

Many thanks for the clarification!

Further to this, if the principal proposes to export the goods directly the job worker place, can the principal prepare the invoice on the basis of "Bill-from" "Ship-from" (or) does he have to get the job worker place registered?

Would be grateful if clarifications can be given referring the relevant provisions under GST.

[Shilpi Jain]

if job worker is registered can do, else add JW place as additional place of business of principal

[Sadanand Bulbule]

Yes Sir.  The principal can export the goods directly from the place of job worker and such supply is treated as zero rated under Section 16 of the Act. Better to get the job workers place as additional place of business of the principal. As far as documents are concerned, they are as per the prevailing system, either under LUT or IGST payment, whichever is applicable.

E-way bill should ensure the correct and complete particulars about the place of origin of consignment to the place of port for export purpose to avoid interception in transit.

AI Summary

Packing as job work under GST preserves principal ownership and enables tax-exempt movement with proper compliance.
Packing, labelling and repacking performed on goods belonging to a registered principal qualify as job work under Section 2(68) and CBIC Circular No. 38/12/2018 when the goods remain the principal's property and the activity is a treatment or process; proper documentation and compliance are required. Consequences include sending goods without payment of tax under applicable procedures, preservation of input tax credit subject to compliance, ability to export directly from the job worker's premises with appropriate documentation, and practical advice to treat the job worker's place as an additional place of business and ensure correct e way bill particulars.