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Waste and Scrap, Goods and Services Tax - GST

Issue Id: - 115035
Dated: 2-6-2019
By:- Kaustubh Karandikar
Waste and Scrap

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XYZ is in the manufacture of Sweets and Namkeen. The waste generated while manufacturing these products are non – marketable and therefore is disposed of by dumping and destroying outside the factory without payment of GST. Are they required to proportionately reverse the ITC on common goods and services since no GST is paid on such waste?

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Showing Replies 1 to 6 of 6 Records

1 Dated: 2-6-2019
By:- Alkesh Jani


At the very outset, I wish to comment that in GST "marketability" is not the measure for payment of GST. However, when manufacturing process is undertaken, waste may be generated, which is disposed of falls within the definition of "outward supply" given at Section 2(83) of CGST Act, 2017 and disposal of is also included in "Supply" under Section 7(1) of CGST Act, 2017. The disposal of goods (waste) is also covered under Section 17 (5) (h) of CGST Act, 2017.

In view of above, the said waste when disposed of without payment of GST, ITC proportionate to waste disposed of is required to be reversed.

Our experts may like to offer their comments in the matter.


With Regards

2 Dated: 6-6-2019

In our view there is no supply involved in this matter since waste goods are being dumped as per the provisions of Environmental laws. Bill of Supply along with e-way bill shall be issued.

3 Dated: 13-6-2019
By:- Brijesh Verma

It is a manufacturing process loss. It's totally different from the word "lost" used u/s 17(5) which triggers reversal of ITC.

No need to make any reversal.

4 Dated: 15-6-2019
By:- Hasmukh Patel

Brijesh Verma is absolutely right. Waste generate during manufacturing process is not consider as out word supply of destroy of goods. No need to reversal of ITC. If final finished products are destroy are liable to revercel of ITC.

5 Dated: 25-6-2019
By:- Ganeshan Kalyani

If this is a manufacturing scrap then TCS - Tax Collection at Source is applicable under Income Tax Act. on this transaction.

6 Dated: 24-5-2020

In GST Regime, there is no concept of manufacturing, However, documents related to manufacturing need to be preserved as prescribed in GST Law.


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