Section 19 of UTGST Act 2017: Transitional Provisions relating to Job Work

Provisions under Section 19 of the Union Territory Goods and Services Tax (UTGST) Act, 2017 relating to “Transitional Provisions relating to Job Work”, are as under:

Section 19 of UTGST Act 2017: Transitional Provisions relating to Job Work (CHAPTER VIII – TRANSITIONAL PROVISIONS)

(1) Where any inputs received at a place of business had been desptached as such or desptached 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 a period of six months or the extended period from the appointed day, 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 of the Central Goods and Services Tax Act.

(2) Where any semi-finished goods had been despatched from any 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 (hereinafter 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 a 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 of the Central Goods and Services Tax Act:

Provided also that the person despatching the goods 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 six months or the extended period, as the case may be, from the appointed day.

(3) Where any goods had been despatched from the place of business without payment of tax for carrying out tests or any other process 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 of business 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 such 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 of the Central Goods and Services Tax Act:

Provided also that the person despatching the goods 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 six months or the extended period, as the case may be, from the appointed day.

(4) The tax under sub-sections (1), (2) and (3) shall not be payable only if the person despatching the goods and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the said person on the appointed day in such form and manner and within such time as may be prescribed.

Amendments History:

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Commentary on Section 19 of UTGST Act, 2017

Section 19 of the Union Territory Goods and Services Tax (UTGST) Act, 2017 outlines the transitional provisions related to job work. This section is divided into four subsections, which cover various scenarios where goods are sent for job work prior to the appointed day and returned on or after the appointed day.

Section 19(1) of UTGST Act, 2017

Subsection (1) addresses the situation where inputs are sent for job work and are returned after the appointed day. No tax shall be payable if the inputs are returned within six months from the appointed day. The Commissioner may extend this period by up to two months if a sufficient cause is shown. If the inputs are not returned within the specified time, input tax credit is liable to be recovered under section 142(8)(a) of the Central Goods and Services Tax Act, 2017.

Section 19(2) of UTGST Act, 2017

Subsection (2) pertains to semi-finished goods sent for manufacturing processes prior to the appointed day and returned on or after the appointed day. No tax shall be payable if the goods are returned within six months from the appointed day. The Commissioner may extend this period by up to two months if a sufficient cause is shown. If the goods are not returned within the specified time, input tax credit is liable to be recovered under section 142(8)(a) of the Central Goods and Services Tax Act, 2017. The person dispatching the goods may also transfer them to a registered person for supply or export under certain conditions.

Section 19(3) of UTGST Act, 2017

Subsection (3) relates to goods sent for testing or other processes without payment of tax before the appointed day and returned on or after the appointed day. No tax shall be payable if the goods are returned within six months from the appointed day. The Commissioner may extend this period by up to two months if a sufficient cause is shown. If the goods are not returned within the specified time, input tax credit is liable to be recovered under section 142(8)(a) of the Central Goods and Services Tax Act. The person dispatching the goods may also transfer them for supply or export under certain conditions.

Section 19(4) of UTGST Act, 2017

Subsection (4) states that tax exemptions under subsections (1), (2), and (3) are only applicable if the person dispatching the goods and the job worker declare the details of the inputs or goods held by the job worker on behalf of the person on the appointed day in the prescribed form, manner and time.

In summary, Section 19 of the UTGST Act, 2017 establishes transitional provisions relating to job work to facilitate a smooth transition from the existing law to the new GST regime. These provisions are aimed at preventing double taxation and ensuring that businesses engaged in job work or other processes are not burdened with additional tax liabilities for goods dispatched and returned during the transition period. However, the tax exemptions are conditional upon proper declaration and adherence to the prescribed rules and regulations.

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Note: The UTGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended  through UTGST (Amendment) Act 2018, Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective UTGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.