Daily Dose of GST Update By CA Pradeep Jain

Articles deal with Section 175 of revised model GST Law on Inputs removed for job work and returned on or after the appointed day.

Section 175Inputs removed for job work and returned on or after the appointed day

This section intends to enable the receipt of goods sent on job work before the appointed day but received back after the appointed day. Like the previous sections the time limit has been kept at 6 months from the appointed date to receive back such goods without payment of duty. The provision reads as follows:

Where any inputs received in a factory 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 earlier law prior to the appointed day and such inputs, are returned to the said factory 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 factory within six months from the appointed day.

The bold marked text is the only addition done in this para so as to clarify that the goods can be returned even without doing any job work. In absence of this para, it could have been intended that only job worked goods can be returned back and if the inputs are returned as such, then tax may become payable.

Apart from the above, 3 provisos from the old draft have been replaced to insert another proviso. The old provisos read as follows:

Provided further that tax shall be payable by the job worker if such inputs are liable to tax under this Act, and are returned after a period of six months or the extended period, as the case may be, from the appointed day:

Provided also that tax shall be payable by the manufacturer if such inputs are liable to tax under this Act, and are not returned within a period of six months or the extended period , as the case may be, from the appointed day.

This proviso stated that if the goods were not returned in the stipulated time period, then the manufacture shall be liable to tax and if the goods are returned after the period of 6 months then the job worker will be liable to pay tax. This was a very confusing proviso and it was not clear that who exactly will be liable to tax in event of non return of goods.

The new proviso substituted reads as follows:

PROVIDED FURTHER that if such inputs are not returned within a period of six months or the extended period , as the case may be, from the appointed day the input tax credit shall be liable to be recovered in terms of section 184.

Thus now in event of non return of goods within the stipulated time, section 184 will come into play for the recovery of tax. The section reads as follows:

Where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the earlier law, any amount of tax, interest, fine or penalty becomes recoverable from the taxable person after the appointed day, the same shall be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.

Thus to conclude the tax on late returned goods will be deemed as a arrear of tax under this act and subsequently no input tax credit will be admissible under this act.

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