Skip to content

CA Final · Indirect Tax Laws · Job Work

Rohini Textiles Ltd., a registered person, sends 500 kg of yarn (inputs) under intimation to a registered job worker for dyeing, without payment of tax. The dyed yarn is neither received back nor supplied from the job worker's premises even after 14 months. No extension has been granted by the Commissioner. 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 sent out. The one-year limit for inputs has been exceeded without extension, so the deemed supply relates back to the dispatch date, not the date the period expired.

  1. ANothing happens until three years have passed, since the time limit for inputs is three years
  2. BThe inputs are deemed supplied by Rohini Textiles to the job worker on the day they were sent outCorrect
  3. CThe inputs are deemed supplied on the date of expiry of one year from being sent out
  4. DThe job worker alone is liable to pay tax on the yarn from the date of its receipt

Explanation

For inputs, the time limit is one year from being sent out. If not received back or supplied from the job worker's premises within that period, they are deemed supplied by the principal to the job worker on the day they were sent out. The option naming the expiry date is wrong because the deeming date is the date of sending out. The three-year limit applies only to capital goods.

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