October 2018

Job-Work : Old Wine In Better Bottle? (Part-1)

Sunil Gabhawalla
Rishabh Singhvi
Parth Shah
Chartered Accountants

Job Workers are generally understood as persons who perform a part of a manufacturing process on goods belonging to another. Traditionally, job workers performed outsourced manufacturing/ processing activities by receiving goods belonging to their principal and returning the same after due processing. The arrangements are usually made for certain commercial reasons, such as:


1.   Work requires special skilled labour


2.   Work can performed only with specialised machinery


3.   Infrequent requirement not requiring a full-fledged set-up


4.   Job worker can perform same/ similar tasks at lower operating costs


5.   Paucity of space for job work activity


The objective of this article is to discuss the concept of job work from the perspective of its scope and the general procedures involved in a job work arrangement.


Job Work A specie of a Contract

Job work contracts are usually a combination of a service contract coupled with bailment. The owner of the goods delivers or transfers possession over his goods to another person with a condition of returning the goods or disposing them under the directions of the owner. The essentials of a contract of job work would be as follows:


1.   The objective of the contract is to perform a process/ treatment over the goods



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