23 July 2012
sir, i asked can i claim refund of that unused Input vat Credit. here Client is doing job work of jewelry mfg.and he is not liable to pay any vat hence my question in this case whether he can claim refund of unused input vat credit?
03 August 2025
Great question — and a nuanced one.
You're referring to the Input VAT Credit situation under the VAT regime prior to the introduction of GST (1 July 2017), and your specific case is:
✅ Scenario: A jewelry manufacturer is working on a job work basis.
He does not sell the goods himself, and hence does not have VAT output liability.
He uses raw material (e.g., gold, silver, stones) on which Input VAT has been paid.
You're asking: Can he claim refund of the unutilized input VAT credit?
🔍 Legal Position under State VAT Laws (as of 2012): Under most State VAT laws (e.g., Maharashtra VAT, Gujarat VAT, etc.), refund of unutilized input VAT was not generally allowed unless:
The dealer was making exports (zero-rated sales), or
There was some specific provision in the State VAT law (e.g., tax incentive schemes, capital goods refund etc.).
❌ Job Worker Without VAT Output Liability: If the jeweler is merely a job worker (i.e., he provides labour + processing services), and
He is not selling the finished goods (the goods belong to the principal),
Then he is not making a taxable sale under VAT.
✅ He may not even be required to register under VAT, unless specified by state law.
So, while he might incur VAT on inputs, he cannot set it off against output VAT (as there's none), and therefore:
⚠️ Refund of Input VAT Credit is NOT available in most cases, unless he falls under a special scheme or exports the goods.
🔁 Exception — Exports: If the job work is for an exporter, and the goods are ultimately exported, some states allowed refund mechanisms (direct or through the exporter), but these were highly state-specific.
✅ Conclusion: Situation Input VAT Refund? Reason Job worker not making sales (no output VAT) ❌ Not eligible No VAT output to adjust against, and refund generally not allowed Job worker involved in exports ⚠️ Possibly (state-dependent) Refunds might apply if covered by export-related provisions Job worker also makes taxable sales ✅ Yes (for input used in sales) Can claim ITC and adjust/refund as per rules
You’d need to refer to the specific State VAT Act and Rules (e.g., Maharashtra VAT, Karnataka VAT) to check for any exceptions or schemes that might apply.
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