Query on ITC-04, Delivery Challan, and Job Work Invoice under GST

[Raghav Mehra]

Case:

I am sending goods to a job worker and issuing a delivery challan. The job worker is then issuing me a tax invoice.

Issue 1:

Currently, I am also mentioning the taxable value, GST rate, and amount in the delivery challan.

• Is this correct?

• My understanding is that by mentioning taxable value and GST, it may be considered a supply.

• Ideally, it should only show the book value, with GST as Rs. 0, and the same will be reported in Form ITC-04.

Issue 2:

The job worker is issuing me a tax invoice as:

“Invoice for supply of service (Under Rule 7 of GST)”

In this invoice, they are mentioning the material description on which the job work is done, calculating job work charges + GST accordingly, and also showing the goods HSN.

My understanding is that only the job work charges should be mentioned in the invoice, with the service HSN (not goods HSN).

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Request:

Please confirm if my understanding in both issues is correct.

Thanks in advance.

[Sadanand Bulbule]

Issue 1 – Delivery Challan to Job Worker:

When goods are sent to a job worker, it is not a supply in itself (Sec. 143 of the CGST Act). Therefore, the delivery challan should not mention taxable value or GST.  It should only reflect the book value of goods with GST as “Nil/0”, since tax is not payable at this stage. Correctly, the transaction should be reported in Form ITC-04. So, your understanding here is correct.

Issue 2 – Invoice by Job Worker :

 The job worker is providing a service (job work service). Hence, he must issue a tax invoice under Rule 7 of GST for “job work charges”. The invoice should show only the job work charges, not the value of goods supplied by the principal. The correct HSN code is of the service of job work, not of the goods.

Goods: HSN should not be mentioned in the invoice, except maybe as a reference to material description if needed for clarity (but tax should be levied only on service value). So again, your understanding is correct. 

 In summary:

 Delivery challan: only book value, GST = 0.

Job worker invoice: only job work charges, service HSN

[Raghav Mehra]

Understood. Thank you for the reply.

[Shilpi Jain]

Taxes need not be mentioned in the delivery challan when goods are sent for JW since it is not for a supply. - Rule 55 you could refer

Job worker to mention HSN of services in his service invoice though in the EWB he issues he will mention HSN of the goods. Since the EWB cannot be issued without mention of HSN of goods, the JWr may be issuing invoice with HSN of goods to match with the EWB. This is not in line with law.

[Raghav Mehra]

Understood. Thank you for the reply.

AI Summary

Delivery challan for job work must omit taxable value and GST; invoice should state only job work service charges. When goods are sent to a job worker the delivery challan should not show taxable value or GST but only the book value with tax Nil and the movement reported in Form ITC 04. The job worker must issue a tax invoice for the job work service charging only the job work consideration and using the service HSN; the value of the principal's goods should not be taxed on that invoice, though e way bill or transport documentation may reference goods HSN.