GST Complaince_in Deduction of amount of Contractor

[Prem Choudhary]

Dear Expert

please advice in following in relation to

Scenario:- The ABC Cement Compnay was entered Contract for fabrication works (Mechanical ) under service Contract. In Contract, material (Steel) has been issued by ABC to Contractor for fabrication. After completion of work ,in material reconciliation of Steel, shortage has been found and ABC has decided to debit the vendor of shortage of Steel ( as penalty) .

Issue:-In above Scenario, Since the material(Steel) is part of ABC and steel was not supplied by Contrator :-

• Whether GST Credit Note can raise by Contractor ? or

• ABC should issue Tax Invoice with @18% of GST , Considering supply as per Schedule –II Point-5(e)

please advice above issue

AI Summary

ABC Cement's GST Dilemma: Should Contractor Issue Credit Note or ABC Issue Tax Invoice with 18% GST? A discussion on a forum addresses a GST compliance issue involving ABC Cement Company and a contractor. ABC supplied steel to the contractor for fabrication work, but a shortage was found upon completion. The company plans to debit the contractor for the shortage as a penalty. The primary question is whether the contractor should issue a GST credit note or if ABC should issue a tax invoice with 18% GST. Experts suggest treating the shortage as goods supplied, requiring a tax invoice. Further discussion considers whether ABC should reverse the input tax credit (ITC) for the shortage or issue an invoice.