Please notes the following provisions w.r.t. Taking input tax credit in respect of inputs and capital goods sent for job work. Section 19(5) and 19(6) provides as under :
(5) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job work without being first brought to his place of business.
(6) Where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out:
Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.
Section 143 (1) or (4) provides as under:
143. (1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be
notified by the Commissioner.
(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out
Further Transitional provisions w.r.t. Job work Sec 141 provides w.r.t inputs only and not w.r.t. Capital Goods
In view of above provisions following query emerges :
Plant and Machinery sent to Job Worker on 01/05/15 which was not returned by job worker till date. As per section 19(6) of CGST Act, the same shall be treated as supply by principle on the date when the P&M was sent i.e. on 01/05/15 on which date GST Act has not came into operation. Further on 01/05/ Principle have not claimed any Input Credit therefore question of recovery of any ITC as per Section 142(8)(a) in view of Transional provisions w.r.t. jobwork Section 141 do not arise as said transitional provisions are applicable to inputs only and not with respect to Capital goods. Here it may be noted that Principle in some cases might availed Mvat Credit in FY 1516 but on import or interstate purchase of Plant and Machinery no such MVAT have been claimed by the Principle in FY1516 now following question arises :
(1) Plant and Machinery sent to the place of Job worker prior to incorporation of GST Act and not returned after 3 years after the incorporation of GST Act w.e.f . 01/07/17 can be treated as supply on 01/05/15 or not and how to report said transaction in Form 9 as well as in Form 9C in FY1819 ?
(2) If answer to Q (1) will be different if no mvat credit has been allowed on such P&M which has been either imported or purchased interstate and sent to job worker on 01/05/15 ?
As rightly stated by you that Sec 141 regarding ITC reversal does not cover capital goods. Thus GST law is silent on treatment of capital goods sent to job worker prior to implementation of GST Act and not returned. Accordingly there should be no need for ITC reversal for capital goods in such cases.
In case no ITC is availed even if we apply Sec 141 then also there will be no implication.
Team Clearmytax.in