Job Work under GST: Why Incomplete Challans Can Be Costly
Under GST, sending goods for job work requires strict adherence to documentation norms. Recently, the Allahabad High Court upheld a penalty where the challan lacked details mandated by Rule 45, read with Rule 55 of CGST Rules, citing a valid cause for detention under Section 129 of the CGST Act.
This ruling underscores a hard truth:
An incomplete challan for job work is not just a procedural lapse — it’s a compliance violation.
What Did the Allahabad High Court Rule?
- A taxpayer sent goods for job work with a challan lacking serial number and description of goods.
- Authorities detained the consignment and levied penalty under Section 129(1)(a) of CGST Act.
- Taxpayer argued there was no intent to evade tax.
- Court disagreed, stating that Rule 45(3) mandates full details and should be read with Rule 55(1) which prescribes the format of a challan when goods are moved.
- Since job work challan is not a tax invoice, Rule 55 becomes mandatory to determine genuineness.
📄 Case Reference: Writ Tax No. 640 of 2023 (Judgment dated 21.02.2024)
📘 Source: Allahabad High CourtGST Rules That Matter Here
Rule Description Rule 45(3) Job work movement must be backed by a challan issued by the principal. Rule 55(1) Every challan must include serial number, date, quantity, HSN, and consignee details. Section 129 Empowers officers to detain goods with improper documentation and levy penalty.
What Happens If You Violate These Rules?
- Detention of Goods
- Penalty equal to 200% of tax payable if not resolved
- Blockage of working capital due to seized material
- Legal consequences and interest liability
How to Stay Compliant with Job Work Dispatches
- Use serial-numbered challans with proper date and address
- Mention description, HSN code, quantity, value
- Keep copy with the transporter
- Prefer auto-generated challans from your GST software
- Always reconcile job work dispatch and return in GSTR-1 and ITC-04
Most non-compliances stem from poor documentation, not tax evasion. A detailed challan protects you during transit checks.