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GST UPDATE ON REVERSAL OF ITC IN CASE OF GOODS LOST BY FIRE

Goods and Services Tax - GST - By: - Pradeep Jain - Dated:- 9-12-2017 Last Replied Date:- 22-5-2018 - In GST regime, the scope of definition of inputs, capital goods and input services is very wide and covers almost all the imaginable goods and services that are directly or indirectly used in course or furtherance of business. However, section 17(5) prescribes a list of goods or services on which ITC is not admissible. The opening para of section 17(5) of CGST Act, 2017 reads as follows:- (5) No .....

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hool of thought which opines that the section 17(5) imposes the restrictions on the inputs or capital goods or input services on which ITC is straight forward denied. This section does not talk of the cases wherein the said inputs, capital goods or input services have already been utilized for further production of final products. In other words, this school of thought is of opinion that the question of reversal will arise only if the inputs or capital goods are themselves lost, stolen or destro .....

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both the views, the authors of this update find that the definition of inputs and capital goods use the phrase used or intended to be used in course or furtherance of business . Since this condition is to be checked at the time of admissibility of ITC and at that time the goods lost, stolen or destroyed were intended to be used in course or furtherance of business, the ITC was legally availed. It is worthwhile to mention here that once ITC is legitimately availed, it cannot be demanded back with .....

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ion for demanding back the ITC on already consumed inputs or capital goods or input services, the same cannot be reversed. Also, it is worthwhile to mention here that under Central Excise Regime, there was specific provision for reversing the cenvat credit availed on inputs contained in finished goods lost as well as availing the remission of duty. This was due to the fact that the excise duty was levied on the manufacture . Since the liability had already arisen, the remission was to be taken a .....

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