Automating ITC-04: Managing Job Work Compliance Under Section 143

Indian engineering, textile, and chemical manufacturers depend heavily on specialized subcontracting for powder coating, heat treatment, stitching, and chemical distillation. Section 143 of the CGST Act provides tax relief by allowing raw materials and semi-finished goods to move outside the factory gates without immediate GST payment, provided the movement is accompanied by a Rule 55 Delivery Challan.

The core compliance risk in job work is the statutory return timeline:

• Inputs & Semi-Finished Goods: Must return within 1 year of dispatch.
• Capital Goods & Machinery: Must return within 3 years of dispatch.

If material is not received back within this window, Section 143(3) deems that the goods were sold to the job worker on the original date the challan was issued. The manufacturer must pay GST at the applicable rate, plus 18% mandatory interest calculated back to the original dispatch date.

Every job work challan must record the HSN code, exact gross and net weight, description of the manufacturing process to be performed, and acceptable scrap percentages. When material moves from Job Worker A (turning) directly to Job Worker B (heat treatment), subsequent challans must reference the original parent challan number.

Werkora maintains structured delivery challan records and batch-level tracking of all outside job work movements. Dispatch teams can quickly export organized outward and inward material records, pending vendor quantities, and agreed conversion yields for statutory reporting and reconciliation.