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

Deemed supply of capital goods: failure to return within three years triggers GST and ITC reversal unless extended or regularised.
Capital goods sent to a job worker must be returned within three years or be treated as a deemed supply attracting GST; ITC claimed on such goods must be reversed if not returned. The Commissioner may extend the return period on sufficient cause. Practical measures include seeking extension, documenting continued job-work use, effecting a documented transfer, treating the transaction as supply where permanent transfer is intended, issuing credit notes, or obtaining an Advance Ruling.