Job Work and E-Way Bill, Goods and Services Tax - GST

[Kaustubh Karandikar]

As understood, when the job worker is sending the processed goods back to the principal manufacturer, in the e-way bill, he is supposed to declare the value which will consist of the value of the processed goods + the labour charges. if it is correct then 1) How to arrive at the value of the processed goods? 2) under which provisions it is mentioned that he is supposed to declare the value which will consist of the value of the processed goods + the labour charges?

Posts / Replies

[YAGAY andSUN]

Valuation

As per Schedule II of CGST Act 2017, any treatment or process which is applied to another person’s goods is a supply of service.

Job worker has to issue an invoice for the value of his services i.e. for job work charges. As per section 15(2)(b) of CGST Act, any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient will form part of the valuation for that supply, if it has not been included in the price of such supply.

CBIC has recently issued Circular No. 38/12/2018 dated 26th March 2018 clarified that the value of moulds and dies, jigs and fixtures or tools may not be included in the value of job work services provided its value has been factored in the price for the supply of such services by the job worker.

Further, it is also clarified that the value of services would be determined in terms of Section 15 of CGST Act and would include not only the service charges but also the value of any goods or services used by job worker for supplying the job work services, if the same is recovered from the principal.

It may be noted that while on one hand the circular states that the value of only those goods or services are required to be included in the value of taxable supply which are recoverable from the principal. While on the other hand, it states that the value of moulds, etc. must be included in the value of job work services if their value has not been factored in the price for the supply of such services by the job worker, thereby indicating an apparent contradiction.

Value of moulds and dies, jigs and fixtures may be included while calculating job work charges where the job worker places order for supply of mould to a vendor for use of such mould in his job work and the consideration for supply of such mould is paid by the principal on behalf of the job worker. In such case, it can be said that the value of job work services is suppressed to the tune of additional consideration flowing from the principal to the job worker, through the vendor.

Accordingly, mere supply of moulds and dies, jigs and fixtures by principal to job worker cannot be considered as additional consideration. Therefore, the amortized value of mould, etc. is not required to be included in the value of job work charges. However, the recent circular seems to adopt contradictory position and prone to litigation. Therefore, CBIC should come out with a clarification quickly with respect to such contradiction through circular or notification.

[mohan sehgal]

As I understand,when the Job worker is sending the processed goods back to the principal;he is supposed to declare the value of goods which he originally received from the principal in the e way bill.The processed goods must carry the duplicate copy of the Delivery challan originally received from the principal ; accompanied with the Job worker Invoice of the processing charges.

[mohan sehgal]

Please resolve the issue..

Some experts say the the value of goods to be mentioned in the e way bill must be the same which was originally send by the Principal to the Job Worker because the document no. details to be mentioned on the e way bill are also the same .The challan must be endorsed by the Job worker and the goods be sent back after processing along with Job Worker's Bill of Job Charges.

Other Experts say that the value on the e way bill ;while returning of the processed goods by the Job Worker to the Principal must include his Job Work Charges also.This is confusing because ,no doubt,the value of consignment increase after processing charges levied by the Job Worker but there is no mention of its JOB WORK BILL details on the e way Bill;itself.;as no quote of SERVICE TAX INVOICE (JOB WORK BILL)details is to be required on the eway bill. PLEASE RESOLVE THE ISSUE.......THANKS