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

Deemed supply for job work: principal must invoice and declare supply when return period expires, with tax and interest liability.
When inputs or capital goods sent for job work are not returned or further supplied within the prescribed time, the dispatch is deemed to be a supply by the principal on the date sent; the principal must issue an invoice, declare the supply in the return for the month in which the time limit expired, and pay tax with interest. If goods are returned after the time limit, that return is treated as a supply by the job worker to the principal, and job-worker ITC entitlement is subject to statutory conditions.