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CA Final · Indirect Tax Laws · Job Work

Anand Engineering Ltd. buys a CNC machine (a capital good) and sends it directly from the supplier's premises to a job worker, Bhat Fabricators, on 1 June 2024, and the job worker receives it that day. Anand has not brought the machine to its own place of business. Which statement is correct under the CGST Act, 2017?

The principal can take input tax credit even though the capital goods went straight to the job worker, and the three-year return period is counted from the date the job worker received them. The one-year limit applies only to inputs, not capital goods.

  1. AAnand cannot take ITC on the machine because it was never first brought to its place of business
  2. BAnand may take ITC, and the three-year period for the machine to return is counted from the date the job worker received itCorrect
  3. CAnand may take ITC, but the one-year period applies to the machine
  4. DAnand may take ITC, and the three-year period is counted from the date of the supplier's invoice

Explanation

Section 19(5) allows ITC on capital goods sent directly to a job worker despite section 16(2)(b). The proviso to section 19(6) counts the three years from the date the job worker receives the goods. The one-year limit applies to inputs, not capital goods.

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