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TMI Blog2025 (4) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... t can only be ascertained after the goods are actually decanted from the tanker into the special storage tank (installed at the buyer's premises) & quantity accepted by the buyer. During transit, certain quantity of the liquid gas is converted to gaseous form and evaporates thereby leading to transit loss. 4. During the legacy regime, in terms of circular No. 569/6/2001-CX dated 9.2.2001, excise duty was to be determined & paid in terms of Rule 8 of the Central Excise Rules, 1994 on the total quantity of liquid gasses actually delivered to the customer including the transit loss, if any. The applicant therefore, during this period, was discharging excise duty even on the gases lost in transit. 5. Presently, under the GST regime, they follow the procedure for removal of liquid gases as envisaged in Rule 55 of the CGST Rules, 2017; that the liquid gas is removed under the cover of delivery challan; that since the quantity to be received by the customer is not known at the time of removal, the tax invoice is raised after actual delivery of the gas to the customer. Further, the applicant is discharging GST on the gases lost during transit, out of abundant caution. The formulae adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already used for manufacture of finished goods that are lost or stolen or destroyed, once it is legitimately availed, it cannot be demanded back; * that they would like to rely on the below mentioned judgements viz * M/s. ARS Steel & Alloys International P Ltd 2021 (6) TMI 957 (Mad). * Eastman Exports Global Clothing P Ltd 2023 112 GSTR 106 (Mad). * M/s. R Ganpathy Chettiar 2022 (56) GSTL 129 (Mad). * M/s. Sardhambika Paper & Board Mills P Ltd 2021 (7) TMI 341 (Mad). * that the transit loss is not a loss akin to the one contemplated u/s 17 (5) (h), ibid; * that the gases which were lost in the transit were finished goods which were never supplied to the customer and accordingly, provisions of section 17 (5) (h), ibid are not applicable. 8. In view of the foregoing, the applicant raised the following questions seeking a ruling, viz (i) Whether GST is payable on goods lost in transit; (ii) If GST is payable, what should be the value of supply for the purpose of payment of GST; (iii) If GST is not payable, whether the applicant is required to reverse the ITC in terms of section 17 (5) (h) of the CGST Act, 2017; (iv) If the applicant is required to reverse ITC i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another; ] (b) import of services for a consideration whether or not in the course or furtherance of business; [and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration; * Section 17. Apportionment of credit and blocked credits .- 5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely :- (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and CENTRAL GOODS & SERVICES TAX RULES, 2017 * Rule 55. Transportation of goods without issue of invoice- (1) For the purposes of- (a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known, (b) to (d) the consigner may issue a delivery challan, serially numbered not exceeding sixteen characters, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the liquid gas is loaded, the weighment is done to determine the quantity of liquid gases filled in the VICTT; * the dispatch team generates single or multiple delivery challans in terms of Rule 55 of the CGST Rules, 2017; * the dispatch team initiates a trip sheet document simultaneously in SAP to record movement of the vehicle, distance travelled, etc.; * the finished goods is provisionally reduced in the SAP system; that an E-way bill is generated for the transaction; * the goods are unloaded in the tank at the customers premises; * after unloading/decanting at the customers premises weighment of the vehicle is done; * upon return of the vehicle at the applicants premises, the weighment of the empty vehicle is carried out to ascertain the delivered quantity, the loss, the . return/residual etc.; * the trip sheet document is closed in SAP; * the tax invoice is raised by the applicant on the customer to the extent of the gas delivered by the applicant; * the transit loss entry is accounted in SAP to capture the financial cost of inventory; * the applicant follows the same accounting practice at all locations; that the cost of production on account of the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the date on which the supplier receives the payment with respect to the supply: The applicant is on record, that the invoice is generated post the supply of goods, before which, the transit loss has occurred. 19. As far as the scope of supply is concerned, section 7, [reproduced supra], clearly states that that supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It is evident that there is no supply of the said goods by the applicant to its customer more so since the loss is before the goods are handed over to the customer. Even on the parameters of place of supply and the time of supply, since the loss occurs prior to both the place of supply and the time of supply, in this peculiar situation, we hold that there is no supply as far as transit loss is concerned. 20 In view of the foregoing, we find merit in the claim of the applicant that they are not liable to pay GST on the transit loss of the gas. 21. Now moving on to the second issue ie reversal of ITC, we find that the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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