SECTION 150. INPUTS REMOVED FOR JOB WORK AND RETURNED ON OR AFTER THE APPOINTED DAY

GST Update 30.07.2016

GST DAILY DOSE OF UPDATION:-

TRANSITIONAL PROVISIONS

SECTION 150. INPUTS REMOVED FOR JOB WORK AND RETURNED ON OR AFTER THE APPOINTED DAY

Where any inputs received in a factory 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 earlier law prior to the appointed day and such inputs, after completion of the job work, are returned to the said factory on or after the appointed day, no tax shall be payable if such inputs are returned to the said factory within six months from the appointed day.

The aforesaid period of six months may, on sufficient cause be extended by the competent authority for a further period not exceeding two months.

Tax shall be payable by the job worker if such inputs are liable to tax under this Act, and are returned after a period of six months or the extended period, as the case may be, from the appointed day.

Tax shall be payable by the manufacturer if such inputs are liable to tax under this Act, and are not returned within a period of six months or the extended period , as the case may be, from the appointed day.

These provisions shall apply only if the manufacturer and the job worker declare the details of the inputs held in stock by the job worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed.

The practical difficulty will be faced by the job-workers in declaring the details of inputs held in stock for job work because presently the job workers are not required to get registered if the principal manufacturer undertakes to pay excise duty liability on the job-worked goods. Hence, the job-workers will face difficulty in producing records of stock of inputs held by them for different manufacturers. Furthermore, the benefit of transitional provisions will only be available if the manufacturer and job-worker both declare details of inputs held in stock for job work.

Even otherwise, as per the proposed GST regime, if the job-worked goods are not returned to the principal manufacturer within a period of 180 days from their being sent, the principal manufacturer shall be liable to pay amount equal to cenvat credit availed along with interest. Hence, the consequence of not returning the job-work goods within the stipulated period may prove to be adverse both for the principal manufacturer and the job-worker.

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GST Update 30.07.2016

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