GST on Unrealised export, Goods and Services Tax - GST

[Ethirajan Parthasarathy]

A client of mine effected export by despacthing goods by ship. To their misfortune the ship was hijacked and goods never reached the destination. On technical grounds my client could not get any compensation from insurance company.

My query is whether the client should pay applicable out put tax on the export value or it is enough if ITC is reversed on the cost of the inputs of the goods stolen as provided under sect 17(5)(h) of the CGST Act.

If the opinion of the experts is, applicable output tax is payable, then the party is liable to pay the tax with interest to be calculated after expiry of 9 months from despatcth

If the opinion of the experts is that, only ITC on inputs is to be reversed, then it should be done based on the date of hijacking of the ship.

Posts / Replies

[Amit Agrawal]

Dear Shri RaamSrinivasan Kalpathi Ji,

This is in continuation of last post above:

Under 'Second Issue' described above, kindly also consider situation of 'domestic supply' explained by me in my post at Sr. No. 18 above where I shared my view (with reasons given therein from Point A to E) that such tax-payer will be liable to pay GST against supply but need not reverse any ITC. 

Here again, this 'domestic supply' will not be shown as 'sales' in books of accounts of the tax-payer (as sale was never completed) but same will be shown as 'Goods lost in Transit' (as per applicable accounting standards). 

Do you think that such tax-payer needs to reverse ITC despite paying gst against supply against such 'domestic supply'? Can tax-payer's accounting treatment (as per applicable accounting standards) override legal provisions under GST? 

I will wait for your clarifications. 

Thanking you in anticipation!