Material Return back & insurance co.

[POLYPLEX CORPORATIONLTD]

We had taken ITC on R/M @ 18% and dispatch finished goods to customer. In transit, the goods was damaged and return to plant and we issue credit note and reverse our Output Tax Liability. After survey by insurance company it was decided to sale these goods as it is on scrap @ 5%. Now we pay GST @ 5% on scrap value. and the Rest amount received us without GST from insurance company after deduction as per insurance policy.

Question :-1 . Whether we have reverse credit taken on Raw Material ? If yes How much i.e. on Scrap Qty. or balance Qty. or proportionate Amount received from Insurance Co. ?

2. Whether money received from Insurance Company liable to GST?

AI Summary

Experts Agree: No ITC Reversal or GST on Insurance Claim for Damaged Goods Sold as Scrap under CGST Act. A corporation inquired about the reversal of input tax credit (ITC) and GST liability on an insurance claim after goods were damaged in transit and sold as scrap. Three experts responded, agreeing that ITC reversal is not required since the goods were sold as scrap and do not fall under the restrictions of Section 17(5)(h) of the CGST Act. Additionally, the money received from the insurance company is considered compensation and not subject to GST, as it does not qualify as 'consideration' under Section 2(31) of the CGST Act.