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CA Final · Indirect Tax Laws · Job Work

Shree Plastics Ltd. (registered) sends polymer granules to Anand Moulders, an unregistered job worker, for moulding. The job work generates scrap. Anand Moulders will not supply the scrap itself. As per section 143 of the CGST Act, 2017, who may supply the scrap and where does the tax obligation fall?

Since the job worker is unregistered, the principal, Shree Plastics, may supply the scrap on payment of tax. A job worker can supply scrap directly from its premises only if it is registered, and no exemption exists for scrap from job work.

  1. AShree Plastics, the principal, may supply the scrap on payment of tax, because the job worker is not registeredCorrect
  2. BAnand Moulders may supply it from its premises without registration, with tax paid by the recipient
  3. CThe scrap cannot be supplied until the principal brings it back to its own place of business and one year elapses
  4. DThe scrap is exempt from tax since it arises during job work

Explanation

Waste and scrap generated during job work may be supplied by the job worker directly from his place of business on payment of tax if he is registered, or by the principal if the job worker is not registered. Here the job worker is unregistered, so the principal supplies on payment of tax. Option B is wrong as it applies only to a registered job worker.

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