Board clarification on various provisions related to job work:
Further, the Board of Indirect Taxes and Customs vide its Circular No.38/ 12 /2018 dated 26’th March’2018 has clarified the various issues have been raised by taxpayers regarding the procedures to be followed for job work and the related compliances requirement for the principal and the job worker. The gist of the said circular with various procedures to comply legal requirements for job work has been summarized as under:
1. Scope / ambit of job work:
The job worker is expected to work on the goods sent by the principal. Whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case. Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work.
2. Requirement of registration for the principal / job worker :
(4) Where the inputs or capital goods are not returned to the principal within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1and the principal shall be liable to pay the tax along with applicable interest.
The provisions of section 143 of the CGST Act are applicable to a registered person and it is only a registered person can send the goods for job work under said provisions. It is choice of registered person to avail or not to avail of the benefit of these special provisions of job work.
With regard to registration of job worker , when the job worker and principal are located in the same State in that case job worker is required to take registration only if his aggregate turnover in a financial year has exceeded the threshold limit of registration. Where the principal and the job worker are located in different States, the requirement of registration flows from clause (i) of section 24 of the CGST Act which provides for compulsory registration any inter-State supply of taxable services irrespective of threshold limit of registration. However, exemption from mandatory registration has granted vide Notification No. 10/2017- Integrated Tax dated 13.10.2017 in case of inter-State of supply of services. Hence, a job worker is required to take registration only in cases where his aggregate turnover, to be computed on all India basis, in a financial year exceeds the threshold limit regardless of whether the principal and the job worker are located in the same State or in different States.