Almost every steel trader sends material out at some point. A coil goes for slitting, a plate for cutting, a lot of pipe for galvanising. In the yard this is a line in a register that says sent for cutting and a phone number for the man who has it.
Under GST it is job work, and it carries obligations that sit on you, not on the person doing the work. Getting it wrong is expensive in a specific way: material you never sold can become a taxable supply, backdated, with interest.
What counts as job work
Section 143 of the CGST Act, 2017 covers the procedure. Job work is any treatment or process undertaken on goods belonging to another registered person. The important word is belonging: when your coil is at the slitter’s premises, it is still your stock and still on your books. Nothing has been sold. That is why the document that travels with it is not an invoice.
The document that must travel: a delivery challan
Goods sent for job work move on a delivery challan under Rule 55 of the CGST Rules, not a tax invoice. Rule 55(1) allows a delivery challan in four situations: supply of liquid gas where the quantity is not known at removal, transportation of goods for job work, transportation of goods where the supply has not yet happened, and goods sent on an approval basis.
The challan is serially numbered, not exceeding sixteen characters, and carries:
| # | Particular required on the challan |
|---|---|
| 1 | Date and serial number |
| 2 | Name, address and GSTIN of the consigner, if registered |
| 3 | Name, address and GSTIN or UIN of the consignee, if registered |
| 4 | HSN code of the goods |
| 5 | Description of the goods |
| 6 | Quantity — provisional, where the exact quantity is not known |
| 7 | Taxable value |
| 8 | Tax rate and tax amount, where the transport is for supply to the consignee |
| 9 | Place of supply, for inter-state movement |
| 10 | Signature |
It is prepared in triplicate: the original marked ORIGINAL FOR CONSIGNEE, the duplicate DUPLICATE FOR TRANSPORTER, and the triplicate TRIPLICATE FOR CONSIGNER. In practice the triplicate is the copy that matters to you, because it is what your own return is later built from.
The clocks that run from the day it leaves
Section 143 sets the return periods. Inputs must come back within one year of being sent out. Capital goods have three years. Moulds, dies, jigs and fixtures are outside the limit.
Miss the deadline and the consequence is not a late fee. The original dispatch is treated as a deemed supply on the day the goods were sent out, and tax becomes payable on it with interest running from that date. You owe GST on material you never sold, calculated from a date months in the past.
For a steel trader this is a realistic risk rather than a theoretical one. A lot of plate sent for cutting, part-returned, with the balance sitting at the job worker because the customer order changed, is exactly the case that quietly passes a year.
ITC-04: the return you file about it
Rule 45 of the CGST Rules requires the principal to report goods sent to and received from job workers in Form GST ITC-04. How often depends on turnover:
| Annual aggregate turnover | Frequency | Due |
|---|---|---|
| Above ₹5 crore | Half-yearly | 25 October (Apr–Sep) and 25 April (Oct–Mar) |
| Up to ₹5 crore | Annually | 25 April |
This obligation is yours, not the job worker’s. A common and costly assumption is that the slitter files something on your behalf. They do not.
E-way bills work differently for job work
Under Rule 138, where the principal and the job worker are in different states, an e-way bill is required for the movement regardless of the consignment value — the usual ₹50,000 threshold does not apply. Either the principal or the registered job worker may generate it.
For movement within a state, there is no such special rule: the ordinary threshold for your state applies. Traders near a state border get caught by this regularly, because the same short trip is treated differently depending on which side of the line the job worker sits.
Waste and scrap
Slitting and cutting generate scrap, and it has to be accounted for. Under Section 143(5), waste and scrap generated during job work may be supplied by the job worker directly from their premises on payment of tax if they are registered; if they are not, it is supplied by the principal. Either way it is a supply that someone declares. Scrap that simply stays with the job worker as part of the commercial arrangement still has to be dealt with in your records rather than forgotten.
A routine that keeps this straight
- Raise a delivery challan for every outward movement, in triplicate, with all ten particulars. Never an invoice.
- Record the challan number, date, material, weight and the job worker against the specific lot, not just against the party.
- Diarise the return date — one year from dispatch for inputs — on the day the material leaves, not later.
- Reconcile part-returns against the original challan as they come back, so the open balance is always visible.
- Check the inter-state versus intra-state e-way bill position before the lorry moves.
- Review open challans every quarter, well before the ITC-04 due date, and chase anything approaching the one-year mark.
What SteelERP does and does not do here. SteelERP does not generate ITC-04 returns, does not generate e-way bills, and does not produce e-invoices or IRNs. Job-work tracking is not a feature of the product today, and this article is not a pitch for one.
What it does hold is the layer underneath: what material you own, what each coil or lot weighs, which yard it sits in, and what left on which challan. A job-work register is only as good as those numbers, and in most yards those are the numbers that are wrong. For the return itself, work with your accountant.
The short version
Material sent out is still yours, it travels on a Rule 55 delivery challan, inputs must return within a year or become a backdated deemed supply, you file ITC-04 half-yearly above ₹5 crore of turnover and annually below it, and inter-state job-work movement needs an e-way bill at any value. None of that is difficult. It only becomes expensive when the register was the only record.
Sources
Section 143 of the CGST Act, Rule 45 and ITC-04 frequencies, the one-year and three-year return periods and the deemed-supply consequence — Job Work under GST & ITC-04 compliance guide (TaxGuru). Rule 55 delivery challan particulars, the triplicate markings and the four permitted circumstances — Rule 55, CGST Rules (CBIC) and Delivery Challan under GST (TaxGuru). E-way bill treatment of inter-state job work under Rule 138 — E-Way Bill under GST: rules and applicability (ClearTax). This article is general information, not tax advice; confirm your own position with your accountant.