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CA Final · Indirect Tax Laws · Job Work

Kaveri Engineering Pvt. Ltd. sends a machine (a capital good) to an unregistered job worker for processing and also sends a set of jigs and fixtures to the same job worker. Neither item returns within three years of being sent out, and no extension has been granted. Which statement is correct under the CGST Act, 2017?

The machine is deemed supplied on the day it was sent out, because capital goods must return within three years. Jigs and fixtures are excluded from the deemed supply rule for time limits, so no deemed supply arises for them, and the job worker's registration status is irrelevant.

  1. ABoth the machine and the jigs and fixtures are deemed supplied on the day they were sent out
  2. BOnly the jigs and fixtures are deemed supplied on the day they were sent out
  3. CNeither is deemed supplied, because the job worker is unregistered
  4. DThe machine is deemed supplied on the day it was sent out, but the jigs and fixtures are not subject to the deemed supply ruleCorrect

Explanation

Capital goods not received back within three years are deemed supplied on the day they were sent out. Moulds and dies, jigs and fixtures, or tools are specifically excluded from the three-year rule. Hence only the machine attracts deemed supply. The job worker's registration status does not alter this.

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