Gst on advance received

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Ankit Vyas (Querist)
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28 June 2019 We received advance from our customers against supply of goods. Later the goods are not supplied and deal was cancelled. The amount received as advances was forfeited. What is the implication of GST on such advances forfeited?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 June 2019 This should be covered by Schedule II as mentioned under Section 7-"To tolerate an act" and accordingly will be treated as supply of services chargeable at 18%.

Ankit Vyas

Ankit Vyas (Querist)
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28 June 2019 Thank You Sir
But Schedule II is not a part of definition of supply. Merely receiving amount does not constitute as supply. Then why we are bifurcating it under schedule II..?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 June 2019 It's not merely receiving the money but due to goods are not supplied and deal was cancelled

CA Ashwini Seeram

CA Ashwini Seeram (Expert)
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28 June 2019 This would amount to tolerating an act as per schedule II, and schedule II is removed from the definition of supply, hence there would be no GST implication on the same, since there is no activity involved in tolerating an act.

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