Re - Credit under Job Work

[Kaustubh Karandikar]

What is the relevant Section / Rule under which re – credit can be taken of the GST paid on inputs not received back from the job worker within the prescribed time limit but received subsequently?

[Shilpi Jain]

This would be as per section 16 of CGST Act itself. The principal will issue the invoice for the inputs not received back by treating it as a supply. This will be paid to the department along with interest.

The job worker, if registered can take the credit of this ITC basis the invoice issued by the principal.

[Shilpi Jain]

This will not be regarded as re-credit but will be the first time the JW will take credit.

[Shilpi Jain]

Why has this query arisen? Is it considering the time limit for availing credit or anything else?

[Amit Agrawal]

Payment of taxes with interest u/s 143 (3) read with Rule 45 (4), is not equivalent to 'ITC reversal against inputs sent to job-worker'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Kaustubh Karandikar]

thanks shilpi and amit ji for your valuable views

[Padmanathan KV]

When inputs sent to Job Work is not received back within specified time limit i.e. 1 year, it would be deemed to be supply. As such Principal has to raise invoice on the job worker and pay GST along with interest under section 143(3). So job worker can avail ITC on the same. When the inputs are sent back, he will have to invoice to principal and principal can avail ITC u/s 16

AI Summary

Deemed supply on job work: principal must invoice and pay GST with interest, enabling job worker to claim input tax credit. When inputs sent to a job worker are not returned within the prescribed time they are a deemed supply; the principal must raise an invoice on the job worker and pay tax with interest, enabling the registered job worker to claim input tax credit on that invoice. On return of inputs the job worker invoices the principal and the principal may avail ITC under the usual eligibility rules. Payment under the statutory provision is distinct from an ITC reversal mechanism.