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 andSUN]

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 qualifies as job work under Section 2(68) when performed on registered principal's goods A discussion forum addressed whether packing constitutes job work under GST regulations. Multiple experts confirmed that packing qualifies as job work under Section 2(68) of the CGST Act when performed on goods belonging to a registered principal. CBIC Circular No. 38/12/2018 clarifies that labeling, packing, and repacking activities, even using the job worker's own materials, constitute job work. Key requirements include the principal being GST-registered, goods ownership remaining with the principal during packing, and proper documentation compliance. The forum also addressed export scenarios, confirming that principals can export goods directly from job worker locations as zero-rated supplies under Section 16, with recommendations to register the job worker's place as an additional business location of the principal for smoother operations.