Goods sent for Job work

[Ashish Diwedi]

We (the principal) have sent raw material for processing to job worker. Due to some dispute the job worker neither returned the goods after processing nor did he return the raw material back within the time frame of 1 year. In such as scenario where the inputs are not returned to the principal within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.

If the principal pays GST on the same after 1 year with interest @18% should he raise Invoice for the same to the job worker? In GSTR 1 should it be shown as Invoice for the month in which inputs were sent or the month in which default has been made?

Can the job worker claim ITC of the same?

AI Summary

Job worker fails to return goods; principal must issue invoice, declare supply, and pay GST per GST laws. A principal sent raw materials to a job worker, who failed to return the processed goods or raw materials within the one-year timeframe specified under GST laws. This situation is deemed a supply by the principal, requiring the principal to issue an invoice and declare the supply in the return for the month when the default occurred, paying applicable GST and interest. The job worker may claim Input Tax Credit (ITC) if eligible under Section 16 of the CGST Act. Payment for the invoice can be settled through mutual set-off of payables and receivables between the principal and the job worker.