Original Goods' Value Need Not Be Included In E-Way Bill For Job Work Returns: GSTAT Thiruvananthapuram

The GST Appellate Tribunal, Thiruvananthapuram Bench, has held that when a job worker returns goods to the principal after completing the job work, the transaction value is limited to the job-work charges and applicable duties.

The value of the original goods subjected to job work cannot be included in the consignment value declared in the e-way bill.

The Division Bench of Vice-President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram further held that where the transaction value of the job-work service is below ₹50,000, an e-way bill is not mandatory for the return movement

The case arose from the interception of a vehicle on May 4, 2023, carrying aluminium colour-coated coils and GI sheets from a job worker, Roofstyle Industries, Thripunithura, to the appellant at Pathanamthitta.

The authorities alleged that the goods were not accompanied by valid documents and that no e-way bill was available. A penalty of ₹2,50,884 was consequently imposed under Section 129 of the CGST/SGST Acts. The taxpayer paid the amount to secure release of the goods and subsequently challenged the penalty.

The appellant argued that the goods were being returned after completion of job work and that the movement was governed by Section 143 of the CGST Act and the provisions relating to job work. It submitted that the goods were accompanied by the job work invoice, e-way bill, delivery challan and other relevant documents.

The Tribunal noted that the department's own records showed that the job work invoice and delivery challan were available at the time of interception. It also found that an e-way bill covering the movement from the job worker to the principal had been tendered.

On the question of the value to be declared in the e-way bill, the Tribunal examined Section 15 of the CGST Act and Explanation 2 to Rule 138 of the CGST Rules.

It held that, when goods are returned by a job worker after completion of job work, the supply is of job work services and the transaction value is restricted to the job work charges and applicable taxes.

"..when a job worker returns the goods to the principal after completion of job work, the supply is of job work services only and as per section 15 of the KGST / CGST Act, the transaction value shall be restricted to the job work charges plus applicable duties. The value of the original goods which have been subjected to job work is not includable in the consignment value of the goods which is to be reported in e-way bill", the Tribunal said.

In the present case, the job work invoice showed a value of  ₹1,841, inclusive of CGST and SGST. Since this amount was below the  ₹50,000 threshold under Rule 138, the Tribunal held that generation of an e-way bill was not mandatory.

It rejected the Revenue's contention that the original value of the goods, amounting to ₹6,96,900, had to be included in the e-way bill.

The Tribunal held that the value of the principal's goods on which job work was undertaken is not includable in the consignment value for the purpose of Rule 138.

"When the goods belonging to a principal are returned by the job worker on completion of job work, the value of the goods on which job work has been undertaken is not includable in the consignment value to be declared in the e-way bill", the Tribunal held.

Holding that the taxpayer had complied with the applicable GST provisions, the Tribunal concluded that no penalty under Section 129 was leviable.

The appeal was accordingly allowed, and the Order-in-Appeal was set aside with consequential relief.

For the Appellant: PJ Anil Kumar, Advocate

For the Respondent: Mansoor M I, Authorised Representative