1.

Section 19 - Taking of input tax credit on inputs and capital goods sent for job work

2.

Rule 45 - Conditions and restrictions in respect of inputs and capital goods sent to the job worker

3.

Related notifications and circulars

Section 19 provides for condition and procedure for availing ITC on inputs and capital goods sent by Principal to his agent

Section 19(1)

subject to such conditions and restrictions as prescribed in Rule 45

The principal shall be allowed ITC on inputs sent to a job worker for job work

For meaning of “Principal” refer section 2(88)

For meaning of “Job Work” refer section 2(68)

Section 19(2)

Notwithstanding anything contained in section 16(2)(b), [Condition of Receipts of Goods]

The principal shall take ITC on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business.

Explanation– For this section, “principal” means the person referred to in section 143.

Principal can also send inputs/CG directly to the job-worker without bringing them to his premises and can still avail the credit of tax paid on such inputs or capital goods.

Section 19(4)

subject to such conditions and restrictions as prescribed in Rule 45

The principal shall be allowed ITC on Capital Goods sent to a job worker for job work

Section 19(5)

Notwithstanding anything contained in section 16(2)(b), [Condition of Receipts of Goods]

The principal shall take ITC on Capital Goods even if the Capital Goods directly sent to a job worker for job work without being first brought to his place of business.

Section 19(3)

Where inputs sent for job work are not

received back by the principal after completion of job work or otherwise as per section 143(1)(a) or

supplied from the place of job worker as per section 143(1)(b)

within 1 year of being sent out,

it shall be deemed that such inputs had been supplied by the principal to the job worker

on the day when the said inputs were sent out to job worker:

Provided that where the inputs are sent directly to a job worker, period of 1 year shall be counted from the date of receipt of inputs by the job worker.

Question & Answer

Section 19(6)

Where Capital Goods sent for job work

are not received back by the principal within 3 years of being sent out

it shall be deemed that such CG had been supplied by the principal to the job worker

on the day when the said capital goods were sent out to Job Worker:

Provided that where CG are sent directly to a job worker, 3 years shall be counted from the date of receipt of capital goods by the job worker.

Question & Answer

Rule 45(4)

Where the inputs or CG are not returned to the principal within the time given in section 143,

it shall be deemed that such inputs or CG had been supplied by the principal to the job worker on the day when the said inputs or CG were sent out

and the said supply shall be declared in GSTR-1

and principal shall pay tax + applicable interest.

Section 19(7)

Nothing contained in sub-section (3) or (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.

The provision of deemed supply is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job worker.

Question & Answer

The date of supply shall be the date on which such inputs or capital goods were initially sent to the job worker. Further, interest for the intervening period shall also be payable on the tax.

Principal may send Goods to Job worker through Challan

Rule 45(1)

The inputs, semi-finished goods or capital goods shall be sent to the job worker though challan issued by the principal,

Challan may be issued by Principal or Job Worker

If such goods are sent

directly to a job-worker [1][and

from one job worker to another job worker,

challan may be issued by the principal or the job worker sending the goods to another job worker:

1^st Proviso = Endorsement of Original Challan by Job Worker for further supply

challan issued by the principal may be endorsed by the job worker,

indicating therein quantity and description of goods where the goods are

sent by one job worker to another or

are returned to the principal:

2^nd Proviso - Original Challan may further be endorsed by another Job Worker for further supply

challan endorsed by the job worker may be further endorsed by another job worker,

indicating therein the quantity and description of goods

where the goods are

sent by one job worker to another or

returned to the principal]

Rule 45(2)

challan issued by the principal to the job worker

shall contain the details specified in rule 55.

Rule 45(3)

Details of challans in respect of goods dispatched to a job worker or received from a job worker [2][***]

[3][during a specified period]

shall be included in GST ITC-04 furnished for that period

Time Limit of ITC-04

on or before 25 day of the month succeeding [4][the said period].

Extension of Time Limit by commissioner

[5][or within such further period as may be extended by the Commissioner by a notification.

For all extended date of ITC-04, please refer notification

[6][Explanation to Rule 45(3)

For this sub-rule, the expression “specified period” shall mean.-

(a) Half year in respect of a principal whose aggregate turnover during the immediately preceding FY exceeds Rs.5 Cr; and

(b) a FY in any other case.”]

Period of ITC-04 = Quarterly, Half yearly or yearly

Upto 30-09-2021, ITC-04 was required to be filed quarterly.

From 01-10-2021, ITC-04 is required to be filed as follows

(i) Half yearly return for RP’s whose AT in preceding FY > Rs.5 Cr

(ii) Yearly return for other RPs.

Notification No. 38/2019-Central Tax dt. 31-08-2019

RP is not required to furnish ITC-04 for July, 2017 to March, 2019

In exercise of the powers conferred by section 148, CG notifies that

RPs required to furnish details of challans in ITC-04 u/r 45(3) read with section 143

shall not be required to furnish ITC-04 u/r 45(3)

for the period July, 2017 to March, 2019:

1^st Proviso – Such RPs shall furnish details of goods not received back from job worker for the said period

the said persons shall furnish the details of all the challans of goods dispatched to a job worker in the period July, 2017 to March, 2019 but not received from a job worker or not supplied from the place of job worker as on the 31st March, 2019, in serial number 4 of ITC-04 for the quarter April-June, 2019.

Explanation to Rule 45

For this Chapter,-

(1) “capital goods” shall include “plant and machinery” as defined in Explanation to section 17;

(2) for determining the value of an exempt supply as referred to in section 17(3)

(a) value of land and building shall be taken as the same as adopted for paying stamp duty; and

(b) the value of security shall be taken as 1% of the sale value of such security.