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2020 ] CAPITAL GOODS — MOULDS AND DIES, JIGS AND FIXTURES OR TOOLS : JOB WORK J7

CAPITAL GOODS — MOULDS AND DIES, JIGS AND FIXTURES OR TOOLS : JOB WORK
CAPITAL GOODS — MOULDS AND DIES,
JIGS AND FIXTURES OR TOOLS : JOB
WORK : AN OVERVIEW
CAPITAL GOODS — MOULDS AND DIES, JIGS AND FIXTURES OR TOOLS : JOB WORK
By
R. Prakash
GANPAT RAM & ASSOCIATES

Industry opts for job work procedure, when their
own facility are not sufficient enough to attain the pro-
duction targets in time. In such a situation it resorts to job
work activity, that is sourcing jobs outside their own premises. CGST Act allows
one year time-limit (additionally one year) for inputs and three years’ time-limit
(additionally two years) for capital goods, for keeping in job worker’s premises,
to complete the work and to bring back the goods. The trade faces several diffi-
culties in relation to the provisions on moulds, dies, jigs and fixtures used in job
work. The problems are explained in bullet form as under :-
Background
• Inputs and Capital Goods are the primary components of manufac-
turing units to manufacture goods, wherever it may be.
• Inputs and Capital Goods may be procured by the Industrial Units
for further processing and to produce final products or in some cas-
es, it would be bought for direct consumption.
• Goods and Services Tax (GST) credit on inputs and capital goods
are available to the registered persons, when the same is used for
further business purposes.
• Job work is any treatment or process undertaken by a person on
goods belonging to another and is called by the name “job worker”.
• Section 143(1) of CGST Act, 2017 (Central Goods and Services Tax)
stipulates that a registered person may send inputs or capital goods
to a job worker under intimation, without payment of tax.
• It may bring back the inputs or capital goods, after completion of
job work within one year (additionally one year allowed) or three
years (additionally two years allowed) respectively. As far as capital
goods is concerned, one exceptional clause has been inserted.
• To be precise, capital goods has been given the time-limit of three
years (additionally two years allowed) for keeping it in the job
worker’s premises except moulds and dies, jigs and fixtures or tools.
• Now, it is pertinent to read the definition of capital goods as per
Section 2(19) of CGST Act, 2017.
• The definition is reproduced hereunder :
“(19) “capital goods” means goods, the value of which is capitalised
in the books of account of the person claiming the input tax credit
and which are used or intended to be used in the course or further-
ance of business;”

GST LAW TIMES  3rd September 2020  41