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GST impact on Excess Stocks Account booking(Physical stock is excess then books), Goods and Services Tax - GST

Issue Id: - 116011
Dated: 12-2-2020
By:- Prem Choudhary
GST impact on Excess Stocks Account booking(Physical stock is excess then books)

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Dear Expert

please advice gst impact on following query:-

In physical verification of stock(Raw materials) it was found that the physical is excess over books. please advice on:-

1. if excess stock account for in books, what are consequences in GST ? and

2. if supply of stock was made from sister Concern unit then, GST consequences ?

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Showing Replies 1 to 4 of 4 Records

1 Dated: 12-2-2020
By:- KASTURI SETHI

An assessee is required to maintain proper record of raw material and finished goods under Sections 56 and 57 of CGST Act. If not maintained properly,

(i) Penalty of ₹ 25,000/- is imposable under Section 125 of CGST Act.

(ii) Penalty of ₹ 10000/- under Section 122 (xvi) of CGST Act.

Also see Board's Flyer No.14 dated 1.1.18.

You know tax is on 'supply' of goods (finished). Actually no evasion of GST takes place by way of improper maintenance of records of goods and raw material. But it is a very serious lapse and will invite penalty. Such lapse cannot be taken lightly.


2 Dated: 12-2-2020
By:- Prem Choudhary

Sir

This is not serious lapses, since the stock (purchase) and consumptions are continuing activities 24 X7 and it is properly maintained in SAP . However the gap is arising due to consumption and normal loss booking.

and Management has carried Physical verification and found excess stock over books. hence same will be accounted in books.


3 Dated: 12-2-2020
By:- KASTURI SETHI

Dear Querist,

You may or may not agree. It is your prerogative. I have explained the legal aspect. If you rectify your error before it is detected by the department, it is O.K. What I want to say that Govt. has made provision for imposition of penalty on account of procedural lapse also. It is not in dispute that in this scenario there is no loss of revenue to Govt.


4 Dated: 14-2-2020
By:- Ganeshan Kalyani

The difference will create doubts in the mind of the officer. He may dive deep in the accounting and physical existence of the goods. Actually both physical stock and books stock should be same. It cannot be different.

Sri Kasturi Sir mentioned the Penalty of CGST Act. Equal penalty is there in SGST Act as well. General Penalty can anyway be applied for contravention of any provision of GST provision.


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