JOB WORK CAPITAL GOODS TO RETURN IN 3 YEARS

[VIPUL JHAVERI]

Dear Experts

For our pharmaceutical client, wherein equipments were send to job worker / Loan Licence sites it has been advised to get such equipments back max in 3 years else revese ITC availed quoting sections 143 & 16

According to Section 143 of the CGST Act, capital goods sent to a job worker must be returned to the principal within three years from the date of being sent out. If not returned within this period, it is deemed as a supply from the principal to the job worker, and GST is applicable.

As per Section 16 of the CGST Act, you can claim ITC on capital goods sent to job workers, provided they are returned within the stipulated period. If the capital goods are not returned within three years, the ITC claimed may need to be reversed.

while business manufacturing and job work agreement are continuing and can be supported with job-work in and job work outward challans, still institing on physical movements is somewhat hard to belive

Please suggest way out if any or physical take back and re-send is the only option

AI Summary

Pharma Firm Faces GST Challenge: Return Capital Goods in 3 Years Under CGST Act or Reverse ITC (Sections 143, 16) A pharmaceutical company is concerned about the return of capital goods sent to job workers under the CGST Act. According to Sections 143 and 16, these goods must be returned within three years; otherwise, GST applies, and Input Tax Credit (ITC) must be reversed. While physical return is ideal, alternatives include extending agreements, issuing credit notes, or restructuring ownership. A two-year extension by the Commissioner is possible. Seeking an Advance Ruling may provide clarity. Experts suggest considering these options to comply with GST regulations while minimizing logistical challenges.