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CA Final · Indirect Tax Laws · Job Work

Kaveri Auto Components Ltd. sent a set of jigs and fixtures to a job worker in Chennai on 1 April 2021 for use in manufacturing its parts. The tools have not been returned even after five years and no tax has been paid on them. Which statement is correct under the CGST Act?

No deemed supply arises merely because of the lapse of time. Jigs and fixtures, like moulds and dies and tools, are excluded from the one-year and three-year return limits and from the deemed supply rule. The principal need not bring them back within three years, so the three-year capital goods deadline does not apply.

  1. AThey are deemed supplied to the job worker on 1 April 2021, since the three-year limit for capital goods has lapsed
  2. BThey are deemed supplied on 1 April 2024, when three years expired
  3. CThe deemed supply provisions for non-return do not apply to jigs and fixtures, so no deemed supply arises merely from the lapse of timeCorrect
  4. DThey are deemed supplied only if the Commissioner has refused an extension

Explanation

Section 19(7) says the deemed supply provisions of sub-sections (3) and (6) do not apply to moulds and dies, jigs and fixtures, or tools. Section 143 likewise excludes them from the time limits. So no deemed supply arises just because five years have passed. The first option wrongly applies the three-year capital goods rule.

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