I am a trader last year 21june 2018 my godown was fired due to electric short circuit. Loss 1.62 cr including building. Stock 1.1 cr gst 20 lacks .my insurance investigations still going on now insurance company told that they did not pay gst 20 lacks I reverse the gst amount on 17(5) now please tell who will give my gst
Insurance company ?
Gst department ?
Because I must pay to my supplier he give bill including gst bust stock fired gst not so please help and guide the proper way..
Hardik
(Professional)
(918 Points)
Replied 24 October 2019
Reversal as per 17(5) is correctly done by you, but that loss of GST component have to be borne by you only.. no-one except insurance company can compensate you for your loss..
Always insure the stock amount along with GST component, because you can't recover it from anyone else as the GST has to be paid even on lost or stolen stock whether by reversal of ITC or by way of payment..
The end consumer always takes the entire burden of indirect taxes in a tax structure. Goods and Services Tax (GST) in which as many as 17 different central and state taxes and 23 different cesses got subsumed with effect from 01.07.2017 is also a form of value added tax and the major form of indirect taxes in our country today apart from Basic Customs Duty which prevails only on import of goods. Seamless movement of Input Tax Credit (ITC) is possible in the GST regime on supply of goods and services and a taxable person registered under GST law is eligible for ITC unless it is restricted for him to avail otherwise.
As per Rule 56 (2) of the Central GST Rules, 2017, every registered person has to maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage. However, this provision is not applicable to a taxable person who is either a trader or a manufacturer and has opted for Composition scheme.
A Fire Insurance Policy can cover input goods which may be in form of stocks (raw material, work-in-progress, finished goods, consumables, stores and spares etc.) and capital goods in form of plant and machinery, furniture and fixture, computer, electrical installation etc. Whenever there is an inward supply of either input or capital goods, a taxable person is eligible for ITC which in fact reduces his tax cost. He avail such eligible ITC and utilize the same against off-setting his GST liability which may be in form of Integrated GST (IGST), Central GST (CGST) of State GST (SGST). Of course, ITC available in form of CGST and SGST are not allowed to be utilized against each other for discharging tax liability. However, ITC can be availed by the taxable person by filing GSTR 3B and upon fulfilment of certain conditions which are as under:
There must be a valid and GST compliant Tax Invoice available with the taxable person;
The goods must have been supplied to the taxable person;
The Supplier must have filed GST Return 1;
The Supplier must have paid the GST either by utilizing his ITC or by cash;
The Supplier must have been paid within 180 days from the date of Invoice by the taxable person;
However, as per the provision of Sec. 17 (5) (h) of the Central GST Act, 2017, ITC will not be available to a taxable person in the following cases –
If the goods are lost; or
the goods are destroyed; or
the goods are stolen;
the goods are written off;
Here goods means either the input goods or capital goods and those goods which are taxable and the taxable person i.e. the Insured is eligible to avail ITC or has availed ITC.
In case of loss due to a covered peril under a Fire Policy, an Insured claims at Invoice price which includes GST as applicable. The Insured in normal case avail such ITC by filing his GST Return 3B which is allowed as per GST law. However, if there is loss or damage or destruction or theft/burglary of the insured item in form of Stock, the Insured is required to reverse the ITC already availed on the same as ITC is not available to him in such cases. As there is no scope for further supply or value addition, the GST is to be borne by the taxable person himself who suffers loss/damage/destruction/theft.
An Insured who is unaware of this provision is quite expected to claim the tax cost in form of GST as per the Invoice for Inward supply made to him by a Supplier. However, if he has availed ITC on the same, then he should not be again indemnified for the same as it will amount to gain in his hand. Amount of GST may be excluded while arriving at the gross loss amount. Item wise analysis may be required when the goods are charged at different GST rates.
However, if the Insured is aware of the provision and reversed the ITC for the lost/damaged/stolen goods, then the same may be considered while assessing the loss by the Underwriter only after going through the documentary evidence in form of GSTR 3B in which the Insured has made reversal of ITC. In case, items wise ITC is not possible to be arrived at, then the ratio of tax liability to taxable turnover may be the basis to deduct the ITC availed by the Insured.
It is also prudent to take a declaration from the Insured that he has reversed the ITC for such damaged/lost/stolen goods and shall not avail it again.
Sir
As per above article I am eligible for gst on fire policy
Please check above and guide me it's very important for me life issue so please help
Regards
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