GST on goods disposed off, Goods and Services Tax - GST

[Ethirajan Parthasarathy]

In a manufacturing process, a company uses large quantity of brown paper to prevent chemicals spilling over. The company avails ITC on purchase of brown paper. After completion of manufacturing process, the brown paper becomes hazardous due to contact with chemicals. According pollution control rules, the company has to dispose of waste brown paper in a particular manner. The waste paper is collected by one agency for disposing off of the same. The said agency actually charges certain sum based on the quantity handled which includes transportation also.

As per entry 1 of Schedule 1, disposal of any business asset without consideration also to be treated as supply because ITC on such goods is already availed. My question is how to determine the value for purpose of levy of tax.

Posts / Replies

[Ganeshan Kalyani]

In my view, reversal of input tax credit on the disposal of waste brown paper is not required.

[Mahadev R]

Please examine if this paper continue to be business asset after it is used and becomes hazardous. If it does not continue to be asset, schedule 1 would not be applicable.

[Alkesh Jani]

Sir,

In this regards, I am of the view that the brown paper, was an input used for production of goods, and ITC may be availed. In the instant case, waste is generated and the said waste cannot be sold in the open market and is required to be dispose as per the law. Here it is not disposal but supply of waste please refer Section 7 (1) of CGST Act. Moreover, Schedule-1 (assets includes Inputs) the Cambridge English dictionary "asset" means something having value, such as a possession or property, that is owned by a person, business, or organization"

For valuation purpose, the charges raised by the agency as per Rule 31.

Thanks