- Input Tax Credit on raw materials used in manufacturing finished goods that are destroyed must be reversed according to Telangana AAAR.
- Section 17(5)(h) of the CGST Act bars ITC for goods lost or destroyed, including cases where inputs are used in finished goods that are later destroyed.
- Geekay Wires Ltd. manufactures steel products and avails GST ITC on raw materials.
- A fire destroyed major quantities of finished goods, which were then sold as scrap with applicable GST paid.
- Telangana AAR ruled ITC must be reversed if raw materials are used in finished goods that are destroyed, lost before use, or sold as scrap.
- The Appellant filed an appeal against this ruling.
- Telangana AAAR upheld the need to reverse ITC on destroyed goods, emphasizing the broad definition of input tax under the CGST/SGST Act.
Source: a2ztaxcorp.net
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
