GST on advance from customer

[Kaustubh Karandikar]

XYZ (India) received advance from a customer from Russia towards supply of goods to Russia, but the contract got cancelled due to Russia – Ukraine war and therefore the advance was shown as other income in the books of accounts since not refunded to the customer. Whether XYZ is required to pay GST on it?

[Amit Agrawal]

NO, in my humble view, presuming that advance was so received in convertible foreign exchange in India.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

There would be no liability as the time of supply has not attracted

[Padmanathan KV]

I agree with the views of the experts. No GST shall be liable to be paid on the amount as supply has not fructified.

AI Summary

GST on advances: no liability where advance is treated as other income and the supply did not fructify.
Where an advance received in convertible foreign exchange was later treated as other income because the contract for supply of goods was cancelled and the amount was not refunded, commentators opined that no GST is payable: GST arises only when the time of supply is attracted or the supply fructifies, and here the supply did not materialize.