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CA Final · Indirect Tax Laws · Job Work

Veda Components Pvt Ltd, Pune, a registered manufacturer, sends 500 kg of raw alloy (inputs) on 10 June 2025 directly from its supplier's premises to a registered job worker in Nashik, without bringing them to its own premises. The principal had received the tax invoice for the alloy. Regarding Veda's input tax credit (ITC) on these inputs, which statement is correct?

Veda can take ITC on the alloy even though it went straight to the job worker. Section 19(2) allows the principal credit on inputs sent directly for job work, overriding the usual requirement of receiving the goods at its own place of business.

  1. AITC is not available because the inputs were never received at the principal's place of business
  2. BITC is available, as the principal may take credit even if inputs go directly to the job worker without first coming to the principal's placeCorrect
  3. CITC is available only after the job worker returns the processed goods
  4. DITC is available only if the job worker is also the supplier of the alloy

Explanation

Section 19(2) overrides the receipt condition in section 16(2)(b), so the principal may take credit on inputs sent directly to a job worker. Option A applies the ordinary receipt rule that section 19(2) specifically displaces.

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