Material Return back & insurance co.

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..... Material Return back & insurance co.
Query (Issue) Started By: - POLYPLEX CORPORATIONLTD Dated:- 21-7-2020 Last Reply Date:- 22-7-2020 Goods and Services Tax - GST
Got 3 Replies
GST
We had taken ITC on R/M @ 18% and dispatch finished goods to customer. In transit, the goods was damaged and return to plant and we issue credit note and reverse our Output Tax Liability. After survey by i .....

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..... nsurance company it was decided to sale these goods as it is on scrap @ 5%. Now we pay GST @ 5% on scrap value. and the Rest amount received us without GST from insurance company after deduction as per insurance policy. Question :-1 . Whether we have reverse credit taken on Raw Material ? If yes How much i.e. on Scrap Qty. or balance Qty. or proportionate Amount received from Insurance Co. ? 2. .....

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..... Whether money received from Insurance Company liable to GST? Reply By Spudarjunan S: The Reply: Brief reply to your queries - 1. Reversal not required as the goods were available and sold it as scrap. The restriction u/s 17(5)(h) for "goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample" may not apply as your goods does not fit into any of such phras .....

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..... e. 2.In the case of reimbursement from insurance company the supplier is insurance company and not you. You have not supplied the goods to insurance company. The insurance company is providing the service by agreeing to do an act for which they are receiving consideration (Periodical Premium) and discharging GST. Reply By KASTURI SETHI: The Reply: 1. Reversal is not required. 2. The amount rec .....

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..... eived from the Insurance Company is compensation and is not covered in the definition of 'consideration' provided under Section 2(31) of CGST Act. Moreover, the element of tax/duty is not included in the amount of insurance claim received from the Insurance Company. I support the views of Sh.Spudarjunan S. Reply By Ganeshan Kalyani: The Reply: I agree with the views of the experts. Inp .....

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..... ut tax credit reversal is not required on the goods returned. GST is applicable on goods sold as scrap. Further, there is no GST on the insurance claim received.
Discussion Forum - Knowledge Sharing .....

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