Invoice to be issued during job work, Goods and Services Tax - GST

[Bibhu Tripathy]

In a job work process

The principal has authorised the job worker to take delivery of the goods

but the principal will receive the INVOICES AND TAKE THE ITC

the principal has also authorised the job worker for disposal of the scraps

The principal will take a portion of scrap value.

my question is

whether the Principal will raise any invoice for the value to be received and pass on the ITC.

ANY CIRCULAR OR INSTRUCTION IF ISSUED KINDLY SHARE

Posts / Replies

[KASTURI SETHI]

Sh.Tirpathy Ji,

Pl. go through this circular.

Job work - Issues related to job work under CGST Act, 2017 - Clarification

Circular No. 38/12/2018, dated 26-3-2018

[Bibhu Tripathy]

Thank you sir for the reply. But the circular speaks of taking the ITC by the principal. when the scraps are cleared by the Job worker which regd. nd the principal has not declared the premises of the job worker as his additional place of business, the gst us paid by the job worker. Whether the principal will raise any invoice to job worker certain amount paid by job worker to the principal as scrap credit.

[KASTURI SETHI]

Circular dated 26.3.18 stands amended.

Changes in Board’s circulars consequent upon amendments to the GST Acts effective from 1-2-2019

C.B.I. & C. Circular No. 88/07/2019-GST, dated 1-2-2019

 

[KASTURI SETHI]

It is undisputed fact that principal is the owner of goods and he is also owner of scrap. The principal is responsible for discharging GST on finished goods. The department is concerned with proper and correct payment of GST. Delivery challan meant for job-work means goods have not been sold and this challan is for movement of goods on road without selling the same whereas 'invoice issued' means goods sold. Hence the principal being the owner of job-worked goods can raise invoice. He can also sell scap to any person. The job-worker can purchase scrap from the principal. There are are more circulars on job-work and go through all circulars. If you have any cross query, post here again.

[KASTURI SETHI]

As per proviso (i) to Section 143(1) (b), the premises of job-worker are required to be declared as additional place of business by the principal, if the job worker is unregistered.

[KASTURI SETHI]

Regarding scrap, as per Section (143)(5) of CGST Act if the job worker is registered, the job worker can clear/supply/sell the waste and scrap on his invoice on payment of GST and if the job worker is unregistered, waste and scrap has to be returned to the principal (owner). The principal is also owner of scrap generated during the process undertaken by the job worker.

[Bibhu Tripathy]

Thank you sir. My queries which request is:

The Job worker's place is not the additional place of business of the principal. The Job worker is registered. The Principal in his agreement has empowered the job worker to sale the scraps. The job worker has sold the goods.

The job worker paid a portion of sale proceeds to the Principal. Under such circumstances , Can the Principal raise any invoice to the job worker when the job workers premises has not been declared as his additional place of business?

[KASTURI SETHI]

In my view, yes. The job worker always works for and on behalf of the principal (owner). The job worker can be termed as 'agent' ( used for clarity)The legal status of the job-worker acting as "for and on behalf" is not lost whether it is pre-GST era or GST regime.

[Himansu Sekhar]

I have little confusion

1. As per proviso to Sub sec. 1 of sec 143 the principal can only clear the goods from the premises of job worker if it is the additional place of business. As per the query this does not happen here

2. The clearance of scrap is provided under sub sec. 5 which begins with not withstanding the provisions contained in sub sec 1 and 2. The job worker can clear the goods if he is regd. Or principal may clear the goods if job worker is not regd. If the goods are supplied at the premises of job worker to the job worker, the place of job worker should have been declared as additional place

[KASTURI SETHI]

Sh.Himanshu Sekhar Ji,

I agree with your views at serial no.9 dated 18.3.21. As per Section 143(1) of CGST Act, the principal has to declare the premises of another job-worker as additional place of business, if that job worker is unregistered. Although first job-worker sends the inputs/semi-finished goods to another job-worker by way of endorsing the delivery challan, yet it is the responsibility of the principal. It is covered under Section 143(1) of CGST Act.

 

[Himansu Sekhar]

yes sir.