Job work procedure

[Anurag Chopra]

Hi All,

Facing a peculiar situation under GST (job work procedure), where the Company has sent some goods to job worker, but the job worker has now absconded and has refused to return the goods. The Company has filed a legal case. Further, the time period to get the goods back has also lapsed.

Wanted to check your suggestion, what should the Company do?

• Treat this as outward supply and pay GST on the same along with applicable interest (as per the GST provision u/s 143, 50, 19)
• Or can this be treated as Inventory w/off, destroyed and ITC reversals would serve the purpose.

In my view, GST should be paid on outward supplies, please suggest. Thanks.

AI Summary

Job Worker Fails to Return Goods: Company Must Pay GST on Full Transaction Value Under Statutory Provisions A company sent goods to a job worker for processing, but the worker absconded without returning them. Under GST provisions, since the goods were not returned within the prescribed time limit, they are deemed as an outward supply. The company must pay GST on the transaction value along with applicable interest, treating the situation as a disposal of goods. Inventory write-off is not recommended, and the legal case for recovery does not negate the tax liability.