In this article, we will discuss a very crucial topic which affects almost every manufacturer in his day to day working and that is " e-way bill in case of job-work". Every manufacturer has a question whether he should generate e-way bill in case goods are sent for job-work. We will try to answer all such questions in this article related to job work.
What is Job Work?
- Job work is the processing of goods done by a person (known as job worker) who undertakes such processing on the goods (semi finished or raw material) provided by the principal manufacturer.
- Such processing of goods is done by the job-worker based on the instructions of the principal manufacturer.
What is E-way bill for Job Work?
- E-way Bill is an electronic document generated on the GST E-way Bill Portal for making movement of goods.
- It is a document required to be carried by the transporter while moving the goods of value more than Rs. 50,000 from one place to another either inter-state or intra-state.
- Keep in mind that E-way Bill has to be generated even where the movement of goods is caused for reasons other than supply and the value of goods is more than Rs. 50,000.
- In case of movement of goods for job-work, E-way Bill can be generated by the principal manufacturer or by the registered job-worker. On generation of E-way Bill, a unique E-way Bill Number is generated which is available to principal manufacturer, job-worker and transporter.
Is e-way bill compulsory in case goods are sent for job-work?
There are two possible scenarios in the case of job-work:
(a) Where both principal manufacturer and the job-worker belongs to the same state
(b) Where principal manufacturer sends goods to a job-worker in a different state
(a) Where Principal manufacturer sends goods to job-worker in the same state:- E-way bill is required to be generated where the value of goods sent is more than Rs. 50,000.
(b) Where Principal manufacturer sends goods to job-worker in other state:- E way bill is required to be generated compulsorily irrespective of the threshold limit of Rs. 50,000. It means that you are required to generate e-way bill even where the value of goods is below Rs. 50,000.
Example of E-way Bill for job work
Ramesh of Jaipur (Rajasthan) sends goods for job work to Suresh of Kota (Rajasthan). The value of consignment is Rs. 34,000. In this case, e-way bill is not required to be generated as the both cities are situated in the same state and also the value of goods is less than Rs. 50,000.
Mahesh of Jaipur (Rajasthan) sends goods for job work to Aakash of Ajmer (Rajasthan). The value of consignment is Rs. 58,000. In this case, e-way bill is to be generated as the value of consignment is more than Rs. 50,000.
Arihant of Jaipur (Rajasthan) sends goods for job work to Mukesh of Pune (Maharashtra). The value of goods sent is Rs. 49,500. In this case, e-way bill is to be compulsorily generated as the goods are sent by a person from one state to a different state even if the value of goods is less than Rs. 50,000.
What happens if e-way bill is not generated?
If you are required to generate e-way bill but goods are moved by you without invoice and e-way bill, it constitutes an offence under GST law. It attracts a penalty of Rs. 10,000 or the tax amount (whichever is higher). Therefore, the minimum penalty of Rs. 10,000 may be levied for not complying with e-way bill rules.
Documents required for generating e-way bill in case of job work?
In the case of movement of goods for job-work, no invoice could be issued as there is no sale of goods between principal manufacturer and the job-worker. Therefore, the goods are sent by the principal manufacturer to the job-worker and vice versa on the basis of 'Delivery Challan'. As such, the e-way bill shall be generated on the basis of information contained in the 'Delivery Challan'.
The 'Delivery Challan' issued must contain the following details to comply GST law and e-way bill requirements:-
- Date and number of delivery challan
- Name, address and GSTIN of Principal Manufacturer
- Name, address and GSTIN (if registered) of the job-worker
- Place of Delivery- State and State Code
- HSN code, description and quantity of goods
- Taxable value, tax rate and tax amount (CGST, SGST, IGST, UTGST)
Scenarios in case of job-work - generating e-way bill on job-work
(a) Inputs is sent by the principal manufacturer to the job worker
(b) Inputs are collected back by the principal manufacturer from job-worker, after processing of inputs
(c) Inputs are delivered to the job worker directly from the supplier of principal manufacturer
(d) The job-worker supplies finished goods directly to the customer of principal manufacturer
Scenario-(a): Inputs sent by the principal manufacturer to the job-worker:
In this scenario, e-way bill shall be generated by the principal manufacturer/ job-worker compulsorily if they are situated in different states. However, in case the principal manufacturer and job-worker belong to the same state, e-way bill is required where the consignment value is more than Rs. 50,000.
Scenario-(b): Inputs collected back by the principal manufacturer from the job-worker, after processing:
Requirements for generating e-way bill as under scenario-(a) applies herealso. If the job-worker is registered on the E-way Bill Portal, he shall generate the e-way bill. However, if the job-worker is not registered, the principal manufacturer shall generate the e-way bill.
Scenario-(c): Inputs are delivered to the job-worker directly from the supplier of principal manufacturer:
Suppose: 'A' is the principal manufacturer and 'B' is the job-worker. 'A' procurs raw material from the supplier 'C' and sends the same for further processing to 'B'. On the instruction of 'A', 'C' directly sends goods to the job-worker 'B'. In this case, 'C' shall send the goods to 'B' under cover of invoice and mention the details including address of both 'A' and 'B' as:
Bill to:- 'A'
Ship to:- 'B'
Since, 'C' is making movement of goods under sale to 'A', he shall generate e-way bill as per the e-way bill rules under GST. Further, 'A' should prepare a 'delivery challan' and send it directly to 'B' in respect of job-work.
Scenario-(d): Direct supply of finished goods to the customer of principal manufacturer by the job worker:
The principal manufacturer may supply finished goods to the customers directly from the premises of the job-worker only in two circumstances:-
(a) The job-worker is registered under section 25 of CGST Act or
(b) The principal must declare the job-worker's place as his additional place of business
Read : E-way Bill in case of Supply by unregistered person
Other important points in respect of job-work:
- The principal manufacturer is required to furnish the details of challans in respect of goods sent to a job-worker or received from job-worker or sent from one job-worker to another job-worker.
- Such details are furnished quarterly in FORM GST ITC-04 by the 25th day of the month succeding the quarter.
- If the principal manufacturer desires to deliver goods to his customers directly from the premises of unregistered job-worker, he shall declare job-worker's place as additional place of business in GST registration.
- The principal manufacturer can take input tax credit of inputs sent to job-worker for the job work. He can take the input even where the goods are directly supplied to the job-worker without bringing the same into the premises of the principal.
- The inputs sent to job-worker should be returned back after processing within one year. Otherwise it will be deemed that the principal had supplied the goods to job-worker as 'sale'. In such case, the principal shall issue a sale invoice to job-worker and the date of supply shall be the date on which goods were actually sent for job-work. Thus ,the principal will have to pay output tax along with interest for the delay period.
- Similarly, in case of supply of capital goods, the time limit for returning back is 3 years. However, there is no time limit for return back in case of moulds, dies, jigs, refractory bricks and fixtures etc.
