A manufacturer’s GST compliance is built on three pillars: the input ITC (including capital goods under Rule 43), the job-work documentation under Section 143 and ITC-04, and the output classification. A manufacturing notice typically arises from a capital-goods apportionment error, a job-work documentation gap or a rate-classification dispute.
The Capital-Goods Apportionment
Capital goods used in manufacturing attract ITC, but where the manufacturer also makes exempt supplies, Rule 43 requires apportionment over the useful life. The manufacturer should maintain a capital-goods register with the invoice, the capitalisation date and the apportionment computation. A failure to apportion is a common audit finding.
The Job-Work Documentation
Section 143 permits the principal to send inputs or capital goods to a job worker without payment of tax, subject to the challan, the job-work register and ITC-04. The principal remains responsible for the goods and the tax. A job-work arrangement without the documentation is a common scrutiny trigger.
The Output Classification
The output classification determines the rate and the ITC eligibility of the inputs. The manufacturer should maintain the product specification, the manufacturing process, the HSN and any technical analysis supporting the classification.
What the Consultant Does
The consultant assists with the capital-goods apportionment, the job-work documentation and the output classification. The value is in the reconciliation between the factory records and the GST returns.
Call to Action: We advise manufacturers on capital-goods ITC, job-work compliance and output classification. For a manufacturing-compliance review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.