GST on goods disposed off

[Ethirajan Parthasarathy]

In a manufacturing process, a company uses large quantity of brown paper to prevent chemicals spilling over. The company avails ITC on purchase of brown paper. After completion of manufacturing process, the brown paper becomes hazardous due to contact with chemicals. According pollution control rules, the company has to dispose of waste brown paper in a particular manner. The waste paper is collected by one agency for disposing off of the same. The said agency actually charges certain sum based on the quantity handled which includes transportation also.

As per entry 1 of Schedule 1, disposal of any business asset without consideration also to be treated as supply because ITC on such goods is already availed. My question is how to determine the value for purpose of levy of tax.

AI Summary

Input tax credit reversal on disposal of hazardous waste depends on asset status and valuation by disposal charges.
Whether reversal of input tax credit is required when used brown paper becomes hazardous waste hinges on whether it continues as a business asset; if treated as a supply of waste, valuation for tax purposes should be determined by reference to the charges raised by the disposal agency under the applicable valuation rules.