EXAMPLE-146  

Zed Ltd sent raw material of Rs.2,00,000 (GST paid on purchase is Rs 20000)  to ‘J’ Job Worker on 1st  August,2017 for Job-work on challan. ‘J’ did the Job-work operation on the raw material received from Zed and charged Rs.35,000 as his job charges. He transported goods back to Zed Ltd on 25 Feb,2018.

(i)                 Specify whether transfer of goods by principal to job worker is treated as supply? or whether he is eligible for credit on goods sent to job worker.

(ii)               Specify whether supply of services by the job worker is taxable as supply under GST.

(iii)             Whether returned back job worked goods with in time limit or taxable as supply.

Answer

(i)     As per section 19, principal shall be eligible for credit on tax paid on input or capital goods sent to job worker.

Thus, Alpha ltd is eligible to take credit of input tax of Rs 20000 as the raw material supplied by the principal received back on 25^th Feb 2018 (within one year of transferred). Therefore, as goods returned within one year then it shall not be deemed as supply.

(ii)      Supply of service or goods in the course during job work done on goods sent by principal is a separate supply under GST, Thus consideration of Rs 35000 received by job worker on supply by job worker is taxable under GST.
 

(iii)             Job worked goods in this example are returned within time limit, hence, are not treatable as supply.