Advance money given for supply of goods

This query is : Open

ARUN GUPTA (Querist)
Follow

30 October 2025

"Subject: GST Liability on Unfulfilled Supply and Converted Loan

I had given ₹18 lakhs to a GST-registered supplier for goods supply, but they failed to deliver the goods. Instead, they returned ₹6 lakhs and converted the remaining amount into a short-term loan. Since the supplier didn't fulfill the original supply agreement, I'm concerned about the GST implications.

Please clarify:
1. Is the supplier liable to pay GST on the original supply amount?
2. Does the conversion of the remaining amount into a loan affect the GST liability?
3. As a recipient, do I need to reverse any Input Tax Credit (ITC) claimed earlier?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now