Compliance and documentation for Jobwork

Compliance and documentation for Jobwork

Hi,

I am Director of a Pvt Ltd firm in Uttar Pradesh that has imported raw material for manufacturing end product in India. The process of manufacturing the end product is two stage, out which we wish to outsource the first step and own the second stage in-house. We have worked out a commercial agreement for first stage with another Indian firm, for manufacturing the intermediate product from the raw material. This manufacturing firm is in Maharashtra. The intermediate product has to be then processed by us in second stage to product the final end product. Even the intermediate product can be sold separately by us to other firms that may be have another end use of the intermediate product.

At this moment, we have to ship the raw material to the manufacturing firm from UP to Maharashtra as a Jobwork for processing. I understand that in place of issuing commercial invoice, we have to issue a delivery challan along with EWayBill and hand it over to the transporter like FedEx etc. However, the delivery challan as well as EWayBill has to mention the commercial value of the raw material which will also be pasted on the consignment packaging.

We do not wish to disclose the value of the raw material to the manufacturer. I have following questions for this transaction:

1) Is it possible to remain compliant and somehow not disclose the commercial value of raw material to this manufacturing firm?

2) This commercial value to be declared has to be which of the following:
a) the cost of import, or
b) the commercial value at which we would have sold this raw material if we were not getting it processed further, or
c) the commercial value at which we would have sold the intermediate product if we were not processing it further, or
d) the commercial value at which we plan to sell the end product?

3) What kind of documentation should I ask the Jobworker (manufacturing firm to which we are outsourcing) to prepare when:
a) I am shipping the raw material to them, and
b) They are shipping intermediate product back to us.

4) Do we have to create only Delivery Challan and EWayBill while shipping raw material or is there any other documentation to be followed under GST?

5) Is there any specific documentation to be done by us under GST when the Jobworker is shipping the intermediate product back to us?

I would sincerely appreciate if you would take out your valuable time to answer my queries.

Asked 5 years ago in GST

Hello Hope you are doing good.

Answers.

1) Yes. It is not mandatory to disclose cost on your E-way bill or delivery challan. You can show the market value of the raw material that you are shipping to that manufacturing firm in these documents.

2) Ans b. Commercial value of this Raw Material when you are shipping Raw Material to them and Ans c when they are shipping the intermediate product back to you..

3) In both the case you have to prepare 1. Delivery Challan & 2. E-Way bill.

4) Yes.

5) You have to maintain quantity wise and HSN code wise & date wise details of the materials that you sent to Job-worker and the materials that you recieved back from them. Also you have to file Gst return ITC-04 for this.

Please rate this ans 5, if you find it informative.

Tejas Shah

CA, Surat

47 Answers

3 Consultations

Talk to Tejas Shah

Dear Sir,

Hope you are doing well !!

In case the goods are sent to a job worker, there isn’t any requirement to issue a tax invoice. However, a delivery challan (DC) is to be issued for such goods.

The DC would contain the following details –

Number of the DC along with the date,

Name, GSTIN and address of the principal (consignor) and the Job Worker (consignee). GSTIN is required to be mentioned in case consignor and consignee are registered under the GST.

HSN code and the description of such goods,

Quantities of goods supplied

Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTGST separately;

The rate of tax and amount of tax

Place of supply

Signature

1. No, it is not possible. You will have to disclose the taxable value of raw material.

2.The commercial value at which we would have sold this raw material if we were not getting it processed further

3.E-way bill copy & Delivery Challan

4.Except E-way bill copy & Delivery Challan, you need to prepare Invoice copy (if the goods are directly sent to the job worker from the vendor’s place.

5.While filing ITC-04 –the in details of goods sent to job worker and Goods received from Job worker all such details would be required to be given. Hence Goods sent out and Received back would be matched.

Please make sure that everything is properly documented.

Payal Chhajed

CA, Mumbai

5189 Answers

302 Consultations

Talk to Payal Chhajed

Hi Tejas/ Payal,

Thanks a lot for your detailed answers this definitely helps ! I missed mentioning one detail that this consignment of raw material will be directly sent to manufacturer from vendor's place.

Moreover, the raw material in being imported and I wish to directly ship it to manufacturer.

As mentioned by Payal, in this case there will be an additional paperwork of preparing the invoice. I have following queries on it:

1) Is the delivery challan and invoice required only for the transportation of the raw material and has to be only maintained by the transporter or a copy of it has to be handed over to manufacturer as well?

2) Is the manufacturer liable to maintain record of goods received for Jobwork under GST Law for which he requires a copy of delivery challan and invoice as proof of disclosed value?

3) The invoice to be provided has to be the original invoice for the raw material from the exporter (international vendor who has shipped the raw material) or I can prepare an invoice in name of my company thereby limiting direct access to international seller?

4) If I can prepare the invoice in name of my company, then can I disclose commercial value at which we would have sold this raw material if we were not getting it processed further or I need to disclose the value at which I have purchase the raw material?

5) Would you advise to directly ship to manufacturer or to first receive it our premises considering the circumstances where we do not wish to disclose any information about seller and value at which raw material has been purchased to the manufacturer?

Looking forward to this further clarification.

Asked 5 years ago

Dear Sir,

Please take a phone consultation for detail discussion.

Payal Chhajed

CA, Mumbai

5189 Answers

302 Consultations

Talk to Payal Chhajed

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