TaxTMI 
TaxTMI 
Sir , if a manufacturer purchases raw material i.e. scrap for manufacture of finished goods namely MS rod clear scrap as such due to its damage or any other reason below the purchase price . Here , the manufacturer takes ITC on the higher price and sells it lower than purchase price . Please clarify whether the above manufacturer are liable to reverse ITC which could not be used in manufacturing and cleared as such . Thanks
ITC availment
06 Nov 2022 
8 Replies 
2091 Views Asked by
Input tax credit entitlement upheld where inputs used in business; one off loss need not trigger ITC reversal, scrutiny possible.
Input Tax Credit need not be reversed when damaged or defective inputs purchased at a higher price are used in the course of business and later sold at a lower price, because GST is levied on the transaction value and ITC entitlement arises from bona fide use in furtherance of business; however, repeated or ingenuine reductions, or related party arrangements, may invite departmental scrutiny and possible disputes. (AI Summary)
Input Tax Credit need not be reversed when damaged or defective inputs purchased at a higher price are used in the course of business and later sold at a lower price, because GST is levied on the transaction value and ITC entitlement arises from bona fide use in furtherance of business; however, repeated or ingenuine reductions, or related party arrangements, may invite departmental scrutiny and possible disputes. (AI Summary)