Skip to content

CA Final · Indirect Tax Laws · Job Work

Ravi Textiles Ltd., a registered person in Surat, sends cotton yarn (an input) to a job worker, Shah Dyers, for dyeing under intimation and without payment of tax. The yarn is neither brought back nor supplied from the job worker's premises within one year, and no extension has been granted. What is the consequence under the CGST Act, 2017?

The inputs are deemed to have been supplied by the principal to the job worker on the day they were originally sent out. The deeming rule looks back to the dispatch date, not to the expiry of the one-year period, so tax liability is tied to that earlier date.

  1. AThe yarn is deemed supplied by Ravi Textiles to the job worker on the day it was sent outCorrect
  2. BThe yarn is deemed supplied on the last day of the one-year period
  3. CNothing happens until the job worker files a return disclosing the goods
  4. DThe input tax credit already taken is automatically reversed without any deemed supply

Explanation

Under section 143(3), inputs not received back or not supplied from the job worker's place within one year of being sent out are deemed supplied by the principal to the job worker on the day they were sent out. The date of the end of the year is not the relevant date, which is why the second option is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Job Work shows your real accuracy, how long you take and where you lose marks.

Practise Job WorkFree diagnostic mock

More Job Work questions