Sec 141 – Transitional provisions relating to job work

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Sec 141 – Transitional provisions relating to job work 2017-04-14T02:54:59+00:00

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  • Miloni ShahMiloni Shah
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    (1) Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day:
    Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
    Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
    (2) Where any semi-finished goods had been removed from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the appointed day and such goods (hereafter in this section referred to as “the said goods”) are returned to the said place on or after the appointed day, no tax shall be payable, if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six months from the appointed day:
    Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
    Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142:
    Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
    (3) Where any excisable goods manufactured at a place of business had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the appointed day and such goods, are returned to the said place on or after the appointed day, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to the said place within six months from the appointed day:

    Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
    Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142:
    Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
    (4) The tax under sub-sections (1), (2) and (3) shall not be payable, only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed.

    Priya MadrechaPriya Madrecha
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    141(1) Inputs removed for job work and returned on or after the appointed day Statutory Provisio
    141.1.1  Introduction
    This transition provision is with respect to inputs removed as such or after partial processing from a place of business for the purposes of carrying out any processing, repair, reconditioning or for any other purposes under the existing laws but are returned / returnable after the date of implementation of GST.
    141.1.2  Analysis
    •    Inputs removed by a Principal to a Job Worker’s premises that are returned to the Principal within 6 months (or within an extended period of further 2 months) no tax shall be payable. However, if the inputs are not retuned within 6 months or such extended period of 2 months than the input tax credit availed by the Principal shall stand be recovered as arrears of tax under CGST Law and no input tax credit of such tax paid shall be allowed under the CGST Law.
    •    Every Principal and the Job Worker shall within 60 days from the appointed day file an application in Form GST TRAN-1 specifying the stock/capital goods held by him in the Job Worker’s premises agent wise/branch wise. Refer Rule 2 of GST Transition Rules.
    •    Eg 1: A manufacturer had removed inputs worth Rs. 5,00,000 on 1st January, 2017 for job work. GST is assumed to be applicable from 1st July, 2017. On 10th December, 2017, the inputs are returned by the job worker. Since, the inputs are returned within 6 months from the date of applicability of GST, no tax will be payable.
    •    Eg 2: In Eg 1 above, if the goods are not returned by the job worker within the period of 6 months from the applicability of GST i.e. by 31st December, 2017, then the input tax credit shall be liable to be recovered in terms of section 142 (8)(a); i.e., the input tax credit shall be liable to be recovered as an arrear of tax under the CGST Act and the amount so recovered shall not be admissible as input tax credit..
    Inputs removed for Job work and returned on or after the appointed day

    141.1.3 Related provisions
    Section     Description
    Section 2(68)     Definition of ‘Job work’
    Section 2(72)     Definition of ‘Manufacturer’
    Section 2(85)     Definition of ‘Place of Business’
    Section 142(8)(a)     Recovery of any amount in pursuance of assessment or adjudication proceedings under the existing laws
    Section 79     Recovery of amount payable to Government

    Statutory Provision
    141(2) Semi-finished goods removed for job work and returned on or after the appointed day
    141.2.1 Introduction
    This transitional provision is with respect to semi-finished goods which were dispatched from a place of business for job work (for the purpose of carrying out any manufacturing processes) under the existing laws but are returned / returnable after the date of implementation of GST.  141.2.2 Analysis
    •    Semi-finished goods removed by a Principal to a Job Worker’s premises that are returned to the Principal within 6 months (or within an extended period of further 2 months) no tax shall be payable. However, if the semi-finished goods are not returned within 6 months or such extended period of an additional 2 months then the input tax credit availed by the Principal shall stand reversed under the existing law or as arrears under the CGST Law.
    •    Every Principal and the Job Worker shall within 60 days from the appointed day file an application in Form GST TRAN-1 specifying the stock/capital goods held by him in the Job Worker’s premises agent wise/branch wise. Refer Rule 2 of GST Transition Rules.
    •    The manufacturer may, instead of bringing the said goods back to his place of business, transfer the said goods to the premises of any registered person for the purpose of supplying there from to places within India or for exports. The premises of the same registered person refers to premises like bonded warehouses where to goods manufactured can be removed from the place of manufacture without payment of excise duty by complying with the relevant provisions of the Central Excise Law. If the supplies from those premises are made within India, tax shall be paid on such supplies. If the said goods are exported no tax need to be paid on such supplies.
    Eg 1: A manufacturer had removed semi-finished goods worth Rs. 5,00,000 on 1st January, 2017 for further processing. GST is assumed to be applicable from 1st July, 2017. On 10th October, 2017, these goods are returned by the job worker. Since the goods are returned within 6 months from the date of applicability of GST, no tax will be payable.
    Eg 2: In Eg 1 above, if the goods are not returned by the job worker within the period of 6 months from the applicability of GST i.e. till 31st December, 2017, then the input tax credit shall be liable to be recovered in terms of section 142 (8)(a); i.e., the input tax credit shall be liable to be recovered as an arrear under the CGST Act.
    Eg 3: In Eg 1 above, assume that the goods are directly transferred to a registered taxable person within 6 months from the applicability of GST i.e. till 31st December, 2017. In this case, tax will be payable under GST if the goods there from are supplied in India and tax will not be payable if the same is exported.
    The analysis of above provision in a pictorial form is summarised as follows:
    Semi-finished goods removed for Job work and returned on or after the appointed day

    141.2.3  Related provisions
    Section     Description
    Section 2(68)     Definition of ‘Job work’
    Section 2(72)     Definition of ‘Manufacturer’
    Section 2(85)     Definition of ‘Place of Business’
    Section 142(8)(a)     Recovery of any amount in pursuance of assessment or adjudication proceedings under the existing laws

    Statutory Provision
    141.3 Finished goods removed for carrying out certain processes and returned on or after the appointed day
    141.3.1 Introduction
    This transition provision is with respect to excisable goods manufactured and removed from a place of business without payment of duty for the purposes of carrying out any tests or any other process and which are returned / returnable after the date of implementation of GST.
    141.3.2 Analysis
    •    Excisable goods are manufactured and removed from the place of business without payment of duty for carrying out tests or any other process (not amounting to manufacture), to any other premises, whether registered or not, in terms of the earlier law prior to the appointed day. Subsequently such goods, are returned to the said place of business on or after the appointed day, then no tax shall by payable if the said
    •    goods, after undergoing the process, are returned to the said place within 6 months from the appointed day.
    •    The period of 6 months may be extended by the Commissioner for a further period not exceeding 2 months.
    •    If the said goods are not returned within 6 months or extended period, from the appointed day, the input tax credit shall be liable to be recovered under the existing law. If the input tax credit is not recovered under the existing law, it will be recovered as an arrear under the CGST Act.
    •    The manufacturer may, in terms of the provisions of the earlier law, transfer the said goods to the premises of any registered person from where the said goods are supplied on payment of tax or exported. The premises of the same registered person refers to premises like bonded warehouses to where goods manufactured can be removed from the place of manufacture without payment of excise duty by complying with the relevant provisions of the Central Excise Law. If the transfer from those premises are made within India, tax shall be paid on such transfers. If the said goods are exported no tax need to be paid on such transfers.
    Eg 1: A manufacturer had removed finished goods worth Rs. 5,00,000 on 1st January, 2017 for testing. GST is assumed to be applicable from 1st July, 2017. On 20th November, 2017, these goods are returned by the person after testing the goods. Since the goods are returned within 6 months from the date of applicability of GST, no tax will be payable.
    Eg 2: In Eg 1 above, assume that the goods are not returned directly from the premises of the tester within 6 months from the applicability of GST i.e. till 31st December, 2017. In this case, input tax credit shall be liable to be recovered in terms of section 142(8)(a).
    The analysis of above provision in a pictorial form is summarised as follows:
    Finished goods removed for carrying out certain processes and retuned on or after the appointed day

    141.3.3 Related provisions
    Statute      Section     Description
    IGST      Section 10     Place of supply of goods
    This provision stipulates that immunity from paying tax under section 141(1), 141(2) and 141(3) is available only if both the manufacturer and the job worker declare the details of inputs or goods held in stock by the job worker on behalf of the manufacturer.
    141.3.4 FAQs
    Q1.  Can the benefit of sub section 1, 2 & 3 be availed even if the date of removal of inputs, semi-finished goods or finished goods is falling beyond one year before the appointed  date?
    Yes. There are no restrictions in Sec 141 regarding the time period before the appointed date within which the date of removal of goods removed should fall in order to avail the benefit of Sec 141. The restriction regarding the time limit is only in respect of receiving back of the goods to the place of business from where those goods were originally removed.

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