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GST E-Way Bill Regulations for Manufacturers Engaging in Job Work

This article discusses the GST e-way bill compliance requirements for manufacturers engaged in job work, detailing how e-way bills apply to various scenarios of goods movement, including dispatch to job workers and direct supply to customers. It outlines the necessary documentation like delivery challans and highlights recent regulatory updates, such as 2FA mandates and changes in validity periods. Furthermore, the article explains the sub-user facility, which enhances efficiency for businesses with multiple operational sites.

📖 3 min read read🏷️ E-Way Bill

The introduction of Goods and Services Tax (GST) significantly altered compliance obligations for manufacturing entities. A critical element of GST adherence involves generating electronic way bills (e-way bills) for transporting commodities. Producers are mandated to follow e-way bill rules when goods are moved for job work, encompassing both the dispatch of raw materials and the receipt of finished items. This document details the compliance necessities for manufacturers and clarifies how e-way bills apply in various job work situations.

Recent E-Way Bill Updates

Several key updates have been announced regarding e-way bill regulations:

  • February 6, 2025: Goods falling under Chapter 71 (e.g., pearls, precious stones) are no longer subject to mandatory e-way bill generation, as per Rule 138(14) of the CGST Rules, 2017. However, an e-way bill remains compulsory for intra-state movement of these goods within Kerala, as specified by Notification No.10/24-State Tax dated December 27, 2024. The National Informatics Centre (NIC) has also discontinued the voluntary e-way bill generation option for these items, as per this advisory.
  • January 27, 2025: Kerala has implemented a new facility for creating e-way bills for intrastate movement of gold (Chapter 71, excluding HSN 7117). For imitation jewelry (HSN 7117), the standard e-way bill generation process should still be utilized. This update is detailed in an advisory.
  • December 17, 2024: The GST Network has advised on mandating Two-Factor Authentication (2FA) for NIC e-way bill generation, as outlined in an advisory on December 17, 2024:
    • Businesses with an Annual Aggregate Turnover (AATO) exceeding INR 20 crores must use 2FA starting January 1, 2025.
    • Businesses with an AATO between INR 5 crores and INR 20 crores must use 2FA starting February 1, 2025.
    • All taxpayers, regardless of turnover, are required to use 2FA for e-invoice and e-way bill generation from April 1, 2025.
  • December 17, 2024: Starting January 1, 2025, e-way bills must be generated within 180 days from the document/invoice date.
  • December 17, 2024: Effective January 1, 2025, e-way bill validity extensions will be capped at 360 days from the initial generation date.

E-Way Bills and Job Work

Job work is a crucial component of the manufacturing sector, as many businesses delegate portions of their production. This process can involve initial preparation, subsequent processing, packaging, assembly, or other finishing steps. The movement of goods in job work involves specific scenarios:

  • Raw materials dispatched from a principal to a job worker.
  • Raw materials forwarded directly to a job worker from a supplier.
  • Processed materials returned to the principal after completion of job work.
  • Final products shipped directly to end customers from the job worker's location.

Inputs Sent by Principal to Job Worker or Vice-Versa

If a principal, located in one state, dispatches goods to a job worker in another state, the principal is legally obligated to generate an e-way bill. In these interstate movements for job work, the standard INR 50,000 threshold for e-way bill generation does not apply, meaning an e-way bill is required regardless of the consignment's value.

Inputs Received Back by a Principal After Job Work

Upon completing the job work, the principal has the option to either reclaim the goods or instruct the job worker to deliver them directly to the final customers. If the job worker is registered on the e-way bill portal, they are responsible for generating the e-way bill for this movement. Conversely, if the job worker is not registered, the principal must generate the e-way bill.

Finished Goods Supplied Directly to End Customer from Job Worker

When commodities are dispatched directly from the job worker's premises to end consumers, one of two conditions must be met:

  1. The job worker must hold registration under Section 25 of the GST Act, or
  2. The principal must formally designate the job worker's location as an additional place of business.

In this scenario, if the job worker is registered on the portal, they will issue the e-way bill; otherwise, the principal is responsible for generating it.

Required Documents Before Sending Goods to Job Worker

When goods are transferred to a job worker, a tax invoice is not necessary. Instead, a delivery challan (DC) must be issued, which should include the following information:

  • Delivery Challan number and date.
  • Names, Goods and Services Tax Identification Numbers (GSTINs), and addresses of both the principal (consignor) and the job worker (consignee). GSTINs are mandatory if both parties are GST-registered.
  • Harmonized System of Nomenclature (HSN) code and description of the items.
  • Quantity of goods supplied.
  • Taxable value of the goods.
  • Applicable tax rate and the corresponding tax amount.
  • Location of supply.
  • Signature of the issuing party.

Specific E-Way Bill Requirements for Various Job Work Scenarios

Supply of Liquid Gas

An e-way bill is mandatory for the dispatch of liquid gas when the exact quantity at the time of removal from the supplier's premises is undetermined. The supplier must also issue a delivery challan, which must be carried by the person overseeing the transport. If transportation services are outsourced, the transporter becomes responsible for issuing the delivery challan.

Supply on Approval Basis

According to government circulars, goods supplied on an approval basis can be moved from a registered supplier's business location to another destination, either within the same state or across state lines. This movement must be accompanied by a delivery challan and an e-way bill, where applicable. The tax invoice can be generated upon the successful delivery of the goods. The individual responsible for transport may carry an invoice book to issue the invoice once the sale is finalized.

Stock Transfers and Branch Transfers

E-way bill regulations stipulate that a manufacturer (supplier) must generate an e-way bill for stock transfers or branch transfers if the consignment's value surpasses INR 50,000.

Sub-User Facility for E-Way Bill Generation

An e-way bill is required for every consignment exceeding INR 50,000 in value. For manufacturers operating with multiple branch offices or business locations, generating e-way bills from various points using a single login can be challenging. To address this, the e-way bill system incorporates a sub-user facility. A sub-user can utilize the primary login credentials to perform actions based on assigned access rights. For example, a sub-user might be authorized to generate e-way bills but restricted from rejecting them. The main registered entity must ensure that the correct address is entered in the e-way bill. This feature allows for the creation of multiple sub-users to manage e-way bill generation efficiently. In job work scenarios, goods may transit through several stages—from manufacturer to job worker, back to the manufacturer, or directly to the customer. In each instance of movement, a delivery challan detailing the goods' description, HSN code, taxable value, and tax rate must accompany the consignment.

Further Reading

Frequently Asked Questions

What is the purpose of an e-way bill in GST?
The primary purpose of an e-way bill under GST is to track the movement of goods and ensure that they are being transported in compliance with tax regulations, preventing tax evasion.
When is an e-way bill generally mandatory for goods transportation?
An e-way bill is generally mandatory for the inter-state and intra-state movement of goods when the consignment value exceeds INR 50,000, although specific state rules or special scenarios like job work may have different thresholds or mandatory requirements.
What is the penalty for transporting goods without a valid e-way bill?
Transporting goods without a valid e-way bill can lead to penalties, which may include a fine of INR 10,000 or the amount of tax evaded, whichever is higher, and potentially detention or seizure of the goods.
Can an e-way bill be cancelled or updated after generation?
An e-way bill can be cancelled within 24 hours of its generation if the goods are not transported or are transported incorrectly. It can also be updated with transporter details, but other core details generally cannot be modified after generation.
What details are required to generate an e-way bill?
To generate an e-way bill, key details required include GSTINs of the supplier and recipient, invoice/bill of supply number and date, HSN code of goods, item description, quantity, value, reason for transportation, and transporter ID and vehicle number.

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