GST on Unrealised export

[Ethirajan Parthasarathy]

A client of mine effected export by despacthing goods by ship. To their misfortune the ship was hijacked and goods never reached the destination. On technical grounds my client could not get any compensation from insurance company.

My query is whether the client should pay applicable out put tax on the export value or it is enough if ITC is reversed on the cost of the inputs of the goods stolen as provided under sect 17(5)(h) of the CGST Act.

If the opinion of the experts is, applicable output tax is payable, then the party is liable to pay the tax with interest to be calculated after expiry of 9 months from despatcth

If the opinion of the experts is that, only ITC on inputs is to be reversed, then it should be done based on the date of hijacking of the ship.

AI Summary

Client Seeks Guidance on GST and ITC Reversal for Hijacked Shipment Under Section 17(5)(h) of CGST Act A client exported goods by ship, but the shipment was hijacked, and the goods never reached their destination. The client seeks advice on whether to pay output GST on the export value or reverse the Input Tax Credit (ITC) on inputs as per Section 17(5)(h) of the CGST Act. Experts suggest obtaining RBI approval for writing off the export amount due to non-realization and discuss whether the transaction qualifies as zero-rated supply. Opinions vary on whether ITC reversal is necessary, considering the goods were technically exported but not delivered. The discussion also touches on accounting standards and FEMA regulations.