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CA Final · Indirect Tax Laws · Job Work

Anand Auto Components Ltd. sends inputs directly from its supplier's premises to a job worker. The supplier dispatched the goods on 1 May, and the job worker received them on 20 May of the same year. Counting the one-year limit under the CGST Act, 2017 for the inputs, from which date does the period run, and can Anand claim input tax credit despite the goods not first reaching its premises?

The one-year period runs from 20 May, the date the job worker received the inputs, and Anand can still take input tax credit. The Act expressly allows credit on inputs sent directly to a job worker without first being brought to the principal's premises.

  1. AFrom 1 May; credit is not allowed as the goods were never brought to Anand's place of business
  2. BFrom 20 May; credit is allowed even though the goods were not first brought to Anand's place of businessCorrect
  3. CFrom 1 May; credit is allowed even though the goods were not first brought to Anand's place of business
  4. DFrom 20 May; credit is not allowed until the goods are received back from the job worker

Explanation

For inputs sent directly to a job worker, the one-year period is counted from the date of receipt by the job worker, here 20 May. The Act also allows the principal to take credit on such inputs even if they were not first brought to its place of business, overriding the receipt condition in section 16(2)(b). The 1 May options use the wrong start date.

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