Question

We work as a jobwork on the site with material in the ceramic tiles industry. Our oral agreement is with the ceramic tiles industry. Our payment has been decided on the production of tiles, i.e. their tiles production 1 square feet / 1000 rupees (material and job work). At the end of the month, the payment of gets according to the production of tiles. For this reason, when we are supplying goods, we cannot make invoices, can we supply the goods on delivery challan? and if issue the final invoice at the end of the month? Example as follows. Our agreement has been signed on the production of 1 square feet / 1000 rupees tiles production. Now at the end of the month we have provided 10000 nos of raw materials (abrasive). And at the end of the month the production of tiles was 1500 square feet, so they gave us Rs. 15,00,000 / - (fifteen lakhs) But our raw materials cost Rs. 20,00,000 / - (twenty lakhs) has been used. So how do we create supply invoices and adjust differential amount of Rs. 5,00,000/- in our account.

Answer

You are doing production at the site of Principal it is not Job-work because the job work is defined under section 2 of CGST Act as follows:-
" 'job work' means any treatment or process undertaken by a person on goods belonging to another registered person and the expression 'job worker' shall be construed accordingly; "
You are selling tiles to your customer whom you referring as Principal. In case of Job work, material should be provided by the Principal although, consumables etc. can be provided by the Job-worker. So let us not confuse with the system of Job- work.
Further, you should declare Place of Customer as your additional Place of business. Now, you can send material to additional place under cover of challan & raise invoice to the customer on the basis of production supplied to the customer.
In case Customer is related person then take care of valuation rules. (Reply dt.19/12/2018)