Reversal of Input on damaged goods, Goods and Services Tax - GST

[Shrikanth Parmarthy]

dear experts,

There are transfer of goods from plants located in Andhra Pradesh to Sales office located in Karnataka through Stock transfer by paying IGST. ITC on those goods was claimed. Some goods were found damaged on receipt at Karnataka sales office. The same goods were transferred back to plant located in AP by paying IGST so that same can be scrapped or reused. Karnataka GST officer is asking to reverse the ITC as per provisions of the act. Our contention is" as we have already paid outward tax there is no loss to GST department". Is our view correct. Kindly provide your views in this regard.

Posts / Replies

[Sadanand Bulbule]

Your view is absolutely correct. The provisions of Section 17[5][h] of the CGST Act has no role  to play in the situation explained by you. Ask the officer to explain under what provision to reverse the ITC amount?

[KASTURI SETHI]

In this scenario, reversal of ITC is not required.

Have you received any letter from the State GST Officer ? 

[Ganeshan Kalyani]

Since it is a receipt of goods at Karnataka sales office the Officer is asking for reversal of ITC. But you might have raised Tax invoice while sending back the goods to AP plant. You would have charged GST and also paid it to the government. In fact you considered it as fresh supply from Karnataka sales office. Explain the officer that effect is same in either way i.e. either you reverse the ITC or pay GST on the goods sent back.