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

Deemed outward supply: GST and interest payable where job-work goods are not returned within the prescribed period.
Goods sent to a job worker that are not returned within the prescribed period are treated as a deemed outward supply by the principal on the day they were sent out; GST and interest on delayed payment must be discharged, and the principal must issue tax documentation. ITC may be claimed when the inputs were sent, subject to the statutory time limit for ITC availment; writing off inventory or claiming destruction does not substitute for treating the event as a deemed supply unless the goods are actually destroyed. Valuation for GST may use open market value or cost-plus approaches and ITC reversals must follow statutory rules.