Does a simple process loss reduce the value of the goods?

- Sales tax: Soham Mashruwala

Under the GST Act, very strict provision has been made in the matter of taxation. A state does not even know a tax, but the claim of the merchant tax being paid in full and the tax collector is like chewing iron chana. In any business, if the goods are damaged on a normal / normal basis or the amount changes due to the flow of time. At such a time, if the business has to return the dividend with 3% interest, the waist will break. Today's article discusses whether there is a process loss or any kind of loss of goods to be returned to the taxpayer.

Section 16 (2) (h)

Section 13 (2) of the GST Act provides for non-receipt of input tax credit due to which when goods are lost, stolen, destroyed, compounded or discarded or distributed as gifts The dividend is not receivable when it is or is given as a free sample. Due to this provision, a very large eclipse applies to the dividend.

Analysis of provision

Section 12 (2) of the GST Act is baseless. Its ambition is very high because of the non-obstruction provision. So whether this provision is to be returned under section 12 (2) (h). Earlier, when the Central Excise Act was enacted, when the process of input was lost in the production process, there was no need to return the dividend as it was believed that the goods were used for production. Asahi India Safety Glass Lee by the Supreme Court in this matter. Vs. Union of India 2012 (30) E.L.T. An interesting ruling in SC (12) states that there is no need to return the Central Excise dividend as the finished goods are ultimately produced using various inputs. Under section 18 of the GST Act, when a registered person receives a supply of any good or service and uses it to do business / business or to expand his business, he is entitled to tax. There is no provision in the entire GST Act regarding normal process loss. But as per the provision made in section 13 (2) (h), the tax will also have to be returned for such extraordinary loss. The judgment of the Supreme Court which is given in Asahi Glass can be relied upon but there is no parallel provision in the GST Act which deprives the trader of the right to do business so that the provision is considered unconstitutional in India. Thus when a raw material in the production process loses its share as a process loss, there is a dispute over the return of the dividend.

There was no such provision even under the Gujarat VAT Act. In addition, the petrol-diesel pump operator did not have to repay the tax even if a certain percentage of evaporation and other losses occurred.

The Gujarat Advance Ruling Authority was questioned on whether to return the taxable goods if the finished goods are destroyed due to fire. Jai Chemical Ind. Lee. (AR No. GUJ / GAAR / R / -101 / 2020 ltd 14.10.20) in which it was argued that no raw material or capital goods were burnt but the manufactured goods were burnt so that the dividend could not be returned. Responding negatively by the Authority decided to return the dividend. Under the GST Act, there is a very basic provision in the matter of taxation. In addition, even if the amount in the book is reduced due to the age of the goods, the tax has to be returned. It is good that selling goods at a discount does not reduce the dividend.