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CA Final · Indirect Tax Laws · Job Work

Rajan Auto Components Pvt. Ltd. sent a CNC machine (capital goods) and a set of press tools to a job worker in Pune on 1 April 2023 under intimation, without payment of tax. By 31 March 2026 neither had been received back, and no extension was granted. Which statement is correct under the CGST Act, 2017?

The machine is deemed supplied on 1 April 2023 because it was not returned within three years. The press tools are excluded from the deemed supply rule, since moulds and dies, jigs and fixtures, and tools sent for job work are specifically carved out of the time limits.

  1. ABoth the machine and the tools are deemed supplied to the job worker on 1 April 2023
  2. BNeither is deemed supplied, because capital goods are covered only by a five-year limit
  3. CThe machine is deemed supplied on 1 April 2023, but the deemed supply provision does not apply to the toolsCorrect
  4. DThe tools are deemed supplied on 1 April 2023, but the machine is not deemed supplied since three years run from completion of job work

Explanation

Capital goods not received back within three years of being sent out are deemed supplied on the day they were sent out. However, moulds and dies, jigs and fixtures, or tools are excluded from this deemed supply rule. Hence the machine is deemed supplied on 1 April 2023, while the tools are not. Option A ignores the exclusion for tools.

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