Scope of remission of tax in GST where the supplies are found to be deficient in quantity

[Surender Gupta]

Section 11 of the First Draft Model GST Act states that:

11. Remission of tax on supplies found deficient in quantity

(1) The Central or a State Government may, by rules made under this sub-section, provide for remission of tax on such supplies which are found to be deficient in quantity due to any natural causes.

(2) Any rules made under sub-section (1) may, having regard to the nature of the supply, fix the limit or limits of percentage beyond which no such remission shall be allowed.

Now various question arouse about the the scope and coverage of the remission of tax as per the above stated provision as follows:

• Will it be in line with the the remission of duty in Central Excise;
• Whether it will be post removal of goods from the premises of supplier and before reaching to the destination of recipient;
• Will it address the issue of manufacturing loss, process loss or storage loss.

Finally, what was the need to bring this kind of provision in GST. Will it not being inspect raj indirectly?

AI Summary

Remission of tax for deficient supplies: clarify scope, timing, and treatment of manufacturing and storage losses under GST.
Remission of tax on supplies found deficient in quantity permits rulemaking to relieve tax where goods are deficient due to natural causes and to fix percentage limits beyond which remission is not allowed. The provision is ambiguously drafted regarding timing, scope and procedures, raising questions whether remission applies post removal and whether it covers manufacturing, processing, storage or transport losses; practitioners stress the need for rules that define eligibility, quantification, inspection, reassessment and procedural safeguards to prevent harassment.