Majumdar Industries is a partnership firm located in Jaipur. It is presently engaged in manufacture of machinery parts. Industries has given the following information relating to input tax credit for the month of Decembe

CS Executive · Tax Laws and Practice · PYQS · June 2024
Majumdar Industries is a partnership firm located in Jaipur. It is presently engaged in manufacture of machinery parts. Industries has given the following information relating to input tax credit for the month of December, 2023. Particulars GST Amount (₹) Purchase of raw material received in two equal instalments viz. the first one in December, 2023 and the second instalment in January, 2024 5,50,000 Purchase of consumables delivered directly to the job workers. Only invoice was received by the firm. 1,50,000 Purchase of bus (seating capacity 18) for transport of employees from residence to factory and back. 8,40,000 Input tax credit in respect of general insurance for motor cars of the firm used by Chief Engineers and Supervisors for official work. 12,000 Payment made to ABC Caterers for providing breakfast and lunch to the workers as voluntary staff welfare measure. 60,000 Now it is proposing to add trade in textile goods in addition to such manufacturing activity in Kota (Rajasthan) w.e.f. 1st April, 2024. Also, it proposes to open its machinery parts manufacturing activity in places such as Udaipur, Jodhpur and Bikaner (all places located within the State of Rajasthan). The management wants to obtain separate GST registration for the said multiple places of business. As regards trade in textile goods, it would be on pan India basis and it has appointed you as GST consultant. From June, 2024 Majumdar Industries is further planning to send the raw materials and semi-finished goods to job workers across Rajasthan for scaling up its production quantity of machinery parts. For the purpose of manufacture of the goods it would also send moulds and dies, jigs and other tools to the job workers for getting the product manufactured as per specifications and to achieve uniformity in production. As a GST Consultant, you are required to state the time limit for return of semi-finished goods sent to job workers including moulds and dies given to them. When would such movement be treated as supply of goods ?

Answer & Explanation:

Time limit for return of semi-finished goods sent to job worker The inputs by way of semi-finished goods sent to the job worker should be brought back to the premises of the principal or alternatively supplied by the principal directly from the job workers premises within the time period as given below: Within one year in the case of inputs; And within 3 years in the case of capital goods. Moulds and dies, jigs and fixtures or tools sent out to a job worker are not to be treated as capital goods and therefore need not be brought back within 3 years' time referred above. If the goods are not sold or brought back within the stipulated time as mentioned above, the activity between the principal and the job worker would be treated as 'supply' from the date of original dispatch of goods by the principal and accordingly tax is payable thereon by the principal. Job work includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.

Topics: GST Laws

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