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CA Final · Indirect Tax Laws · Job Work

Desai Pharma Ltd. sends raw materials to a registered job worker, Iyer Labs, for processing. During the job work, waste and scrap is generated. Which statement is correct under the CGST Act, 2017 about the supply of this waste and scrap?

Because the job worker is registered, he may supply the waste and scrap directly from his own place of business on payment of tax. If the job worker were unregistered, the principal would supply it instead.

  1. AOnly the principal can supply it, after bringing it back to his own premises
  2. BIt can be supplied directly by the registered job worker from his place of business on payment of taxCorrect
  3. CIt is exempt from tax because it arises during job work
  4. DIt must be destroyed unless the principal declares the job worker's premises as an additional place of business

Explanation

Under section 143(5), waste and scrap generated during job work may be supplied by the job worker directly from his place of business on payment of tax if the job worker is registered, or by the principal if the job worker is not registered. Iyer is registered, so Iyer may supply it and pay the tax.

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