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GST REVERSAL OR NOT

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anita

trainee

246 Points Posted on 23 December 2021

Dear Sir,

our client has supplied material worth 10 lakhs to his customer after paying gst which the customer is rejecting on account of some faulty input used in the supplied material.

the customer will not return the material to our client without scrapping it.scrap value will be around 1 lakh

client will also claim this from his vendor who has supplied faulty input which has lead to this rejection.

what should be the correct gst treatment in this matter should our client reverse the gst input taken or can he let it be as he has also paid the outward tax liability.

Please advice.

Replies (2)

Quick Summary

A client supplied goods worth £10 lakhs, paid GST, but the customer rejected them due to faulty input materials. The goods will be scrapped, with a scrap value of £1 lakh. The client intends to claim this from their supplier. The discussion seeks advice on the correct GST treatment: should the client reverse the input GST or can they keep it, having already paid outward tax? The suggested solution involves issuing a credit note for £9 lakhs, reversing the tax paid, and reclaiming proportionate input credit.

Deepak Singh

28 Points Posted on 23 December 2021

I don't understand...

Rajendra Prasad

Employee Private

1142 Points Posted on 24 December 2021

Here your client has to be submit a credit note for 9.00 Lacs to his customer. With this what ever the Tax paid will be reversed and reverse the proportionate input credit on the such material purchased.