GST implication on goods stored in warehouse under excise regime

[Kaustubh Karandikar]

XYZ(Manufacturer) had transferred the goods from factory to warehouse under a specific permission without payment of excise duty in Excise Regime and they are still lying there. 1) Now if they divert these goods to other customers, can they pay GST on sales price even if sale price is less than purchase price? 2) If they scrap this material, do they need to reverse the CENVAT credit availed in the excise regime on the inputs used for manufacturing these pumps or can pay GST on sales value of scrap. 3) If they write off this inventory in books of accounts, do they need to reverse CENVAT credit availed in the excise regime on the inputs used for manufacturing these goods?

[KASTURI SETHI]

Dear Sir,

Query-wise my views are as under:-

1. Yes.

2. You will have to obtain permission from the department before clearing these goods as scrap. After inspect, the department may allow.

3. Yes.

[YAGAY and SUN]

On replying on Point No. 1, in our view if sale price is less than of the Purchase price then you would have to provide clarification to the GST Department along with concrete reasons of the same.

On remaining two points we are in agreement with Kasturi Sir.

AI Summary

GST on goods from excise warehouses: GST payable on actual sale price; scrap clearance needs departmental permission. GST is payable on clearance of goods stored under the excise warehousing regime on the actual sale price, including when that price is lower than purchase price, subject to explanation to GST authorities. Disposal of goods as scrap requires prior departmental permission and inspection; reversal of CENVAT credit is required on write off, and treatment of scrap disposals (credit reversal versus charging GST) depends on departmental approval.