export order canceled compensation received gst treatment

[suresh sathyamurthy]

Dear Sir

We had received export order, against the order we procured the raw material and started processing the raw material, now the buyer wants to cancel the order because of covid and ready to compensate the loss on material procured. we have availed ITC credit, we will be receiving the compensation in foreign currency. kindly advice how to treat under GST

a) compensation received for cancellation of export order

b) ITC credit availed till date

c) the final product can be exported to third party in future

please advice

AI Summary

Debate on GST Implications for COVID-19 Export Order Compensation: Is It Taxable or Not? Clarification Needed. A forum participant raised a query about the GST implications of receiving compensation for a canceled export order due to COVID-19. The discussion involved several experts providing insights. One view suggested that the compensation falls under 'tolerating an act' and GST is applicable, while another argued that compensation for breach of contract is not taxable as it lacks the element of supply. There was consensus that ITC availed need not be reversed, and the raw materials can be used for future exports. The debate highlighted differing interpretations of GST law regarding compensation and the need for government clarification to avoid litigation.