EXAMPLE-138

M/s ABC Limited, a manufacturer had removed raw material worth rupees 10 lakh on 24th January 2017 for further processing to their job worker. Company claimed credit on excise duty paid on purchase of raw material. On 22nd October, these goods are returned by the job worker after processing. GST is applicable from 1st July 2017.

(i)                 Determine whether tax will be paid on supply of goods to the job worker ?

(ii)               If the goods are returned on 24 January,2018, Determine the treatment under GST.  

(iii)If the goods are returned on 24 April,2018, Determine the treatment under GST.

Answer

(i) Section 141(transitional provision) specifies that where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day:

  As M/s ABC received back goods from the job worker with in 6 months from appointed date i.e. before 31 st Dec 2017, therefore, tax (input tax credit) shall not be payable.

(ii)    If goods are returned with in 8 months but after 6 month  from appointed date, then even input tax credit shall not be payable if 2 months period is extended bycommissioner.  

(iii) If goods are not returned with in 8 months from appointed date, .

Then, input tax credit shall be added to output tax liability.