Meaning of Job work under GST law:
Section 2 (68) of CGST Act, 2017, “Job work” means any treatment or process undertaken by a person on goods belonging to another registered person and expression “job worker” shall be constructed accordingly.
For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job worker) to fit in the soles. The job workers send back the shoes to the principal manufacturer.
Service classification for manufacturing services on physical inputs (goods) owned by others (job work) is 9988.
The registered person on whose goods (inputs or capital goods) job work is performed is called the “Principal” for the purpose of section 143 of the CGST Act. The principal must be a registered taxable person under Section 25 of the CGST Act, 2017. The person who under takes to carry job working of another person is called “job worker”.
The transaction between principal and job worker is fully covered under scope of supply and GST is payable thereon. But there is exception in terms of Section 143(1) of the CGST Act, 2017 prescribed that registered person can send any inputs or capital goods, without payment of tax, to a Job worker for job work and there subsequently send to another job worker and likewise.