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CMA Final · Indirect Tax Laws and Practice · Transition to GST (Transitional Provisions)

Meera Textiles sent inputs to a job worker before the appointed day. The inputs were not returned within the period allowed under section 141(1), including any extension. What is the consequence stated in the provision?

If inputs are not returned within the period specified, including any extension, the input tax credit becomes liable to be recovered in accordance with section 142(8)(a). The law does not treat the inputs as returned or waive the credit.

  1. AThe input tax credit becomes liable to be recovered under section 142(8)(a)Correct
  2. BThe job worker alone becomes liable to pay penalty under section 141
  3. CThe inputs are deemed to be returned on the last day of the period
  4. DThe transaction is ignored and no recovery arises

Explanation

The second proviso to section 141(1) states that if the inputs are not returned within the specified period, the input tax credit shall be liable to be recovered in accordance with clause (a) of sub-section (8) of section 142. It does not provide for deemed return or a penalty on the job worker.

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