Goods taken by transporter on behalf of seller
This query is : Resolved
19 May 2018
Dear Sir,
I made a Sales bill in the name of my purchaser. To transport the goods I appointed someone to take the goods from my godown and deliver it to my purchaser.
Now the goods are taken away by my transporter and during transit the goods were lost due to theft. In this case what will be the GST implication as I have made the bill with GST to my purchaser but the transportation was done on behalf of me by my transporter who lost the goods.
Regards,
Divyesh Jain
I made a Sales bill in the name of my purchaser. To transport the goods I appointed someone to take the goods from my godown and deliver it to my purchaser.
Now the goods are taken away by my transporter and during transit the goods were lost due to theft. In this case what will be the GST implication as I have made the bill with GST to my purchaser but the transportation was done on behalf of me by my transporter who lost the goods.
Regards,
Divyesh Jain
23 May 2018
ITC to be reversed for the goods lost.
23 May 2018
According to one opinion GST can be reversed only due to natural calamity and not due to theft.
Please advice
Please advice
26 July 2024
In the event that goods are lost during transit due to theft or any other reason, and you have already issued an invoice with GST to your purchaser, there are specific GST implications and procedural steps you should follow. Here’s a detailed guide on how to handle this situation:
### **1. GST Implications**
**a. GST on Invoice Issued**
- **Tax Liability**: Since you issued an invoice with GST to your purchaser, you are liable for the GST on the sale as per the invoice, regardless of whether the goods were lost during transit.
- **Payment of GST**: You must pay the GST as per the invoice issued, and you should report this in your GST returns.
**b. Input Tax Credit (ITC) for Lost Goods**
- **Claim ITC**: If you have claimed Input Tax Credit (ITC) on the purchase of the goods that were lost, you should adjust for this loss in your GST records.
- **Adjustment**: If the goods were lost and you cannot recover them, you should adjust for the ITC reversal as the goods are no longer available for use or sale.
### **2. Steps to Handle the Loss**
**a. Notify the Insurance**
- **Insurance Claim**: If you have insurance coverage for goods in transit, file a claim with your insurer for the lost goods. This will help recover the financial loss.
**b. Communicate with the Purchaser**
- **Inform the Purchaser**: Notify your purchaser about the loss of goods. Since the goods were lost before delivery, you might need to issue a new invoice or make arrangements for replacement or refund.
**c. Issue a Credit Note**
- **Credit Note**: If the goods are not recoverable and you cannot deliver them, you should issue a credit note to your purchaser. This credit note will adjust the original GST invoice.
- **GST Adjustment**: The credit note should include details of the original invoice and the amount of GST that needs to be adjusted.
**d. Record the Loss**
- **Document the Loss**: Maintain detailed records of the loss, including the police report (if applicable), insurance claim, and communication with the transporter and purchaser.
### **3. GST Reporting and Compliance**
**a. GST Returns**
1. **GSTR-1**:
- **Credit Note**: Report the credit note issued for the lost goods in your GSTR-1 return. This will adjust the sales and GST liability accordingly.
2. **GSTR-3B**:
- **ITC Reversal**: Adjust the ITC in your GSTR-3B return. If you had claimed ITC on the lost goods, you need to reverse the credit for the goods that were not delivered.
**b. Reconcile Records**
- **Ensure Reconciliation**: Make sure your GST returns, accounting records, and financial statements reflect the adjustment for the lost goods and any changes to ITC.
### **4. Legal and Practical Considerations**
**a. Legal Advice**
- **Consult Legal Counsel**: If the situation involves significant financial impact or legal issues, such as disputes with the transporter or insurer, consult with legal counsel for advice on handling claims and legal recourse.
**b. Transporter’s Liability**
- **Transporter’s Responsibility**: If the transporter was negligent, you may seek compensation or recovery from them or their insurance. This would involve filing a claim or legal action against the transporter.
### **Summary**
1. **GST on Invoice**: You are liable for GST on the sale as per the invoice issued, regardless of the loss during transit.
2. **Adjustments**: Issue a credit note for the lost goods, reverse ITC for the lost goods, and report the changes in your GST returns.
3. **Documentation**: Keep thorough records of the loss, insurance claims, and communications.
4. **Legal and Insurance**: Seek compensation through insurance and consider legal action if necessary.
Handling the situation promptly and accurately ensures compliance with GST regulations and minimizes financial impact.
### **1. GST Implications**
**a. GST on Invoice Issued**
- **Tax Liability**: Since you issued an invoice with GST to your purchaser, you are liable for the GST on the sale as per the invoice, regardless of whether the goods were lost during transit.
- **Payment of GST**: You must pay the GST as per the invoice issued, and you should report this in your GST returns.
**b. Input Tax Credit (ITC) for Lost Goods**
- **Claim ITC**: If you have claimed Input Tax Credit (ITC) on the purchase of the goods that were lost, you should adjust for this loss in your GST records.
- **Adjustment**: If the goods were lost and you cannot recover them, you should adjust for the ITC reversal as the goods are no longer available for use or sale.
### **2. Steps to Handle the Loss**
**a. Notify the Insurance**
- **Insurance Claim**: If you have insurance coverage for goods in transit, file a claim with your insurer for the lost goods. This will help recover the financial loss.
**b. Communicate with the Purchaser**
- **Inform the Purchaser**: Notify your purchaser about the loss of goods. Since the goods were lost before delivery, you might need to issue a new invoice or make arrangements for replacement or refund.
**c. Issue a Credit Note**
- **Credit Note**: If the goods are not recoverable and you cannot deliver them, you should issue a credit note to your purchaser. This credit note will adjust the original GST invoice.
- **GST Adjustment**: The credit note should include details of the original invoice and the amount of GST that needs to be adjusted.
**d. Record the Loss**
- **Document the Loss**: Maintain detailed records of the loss, including the police report (if applicable), insurance claim, and communication with the transporter and purchaser.
### **3. GST Reporting and Compliance**
**a. GST Returns**
1. **GSTR-1**:
- **Credit Note**: Report the credit note issued for the lost goods in your GSTR-1 return. This will adjust the sales and GST liability accordingly.
2. **GSTR-3B**:
- **ITC Reversal**: Adjust the ITC in your GSTR-3B return. If you had claimed ITC on the lost goods, you need to reverse the credit for the goods that were not delivered.
**b. Reconcile Records**
- **Ensure Reconciliation**: Make sure your GST returns, accounting records, and financial statements reflect the adjustment for the lost goods and any changes to ITC.
### **4. Legal and Practical Considerations**
**a. Legal Advice**
- **Consult Legal Counsel**: If the situation involves significant financial impact or legal issues, such as disputes with the transporter or insurer, consult with legal counsel for advice on handling claims and legal recourse.
**b. Transporter’s Liability**
- **Transporter’s Responsibility**: If the transporter was negligent, you may seek compensation or recovery from them or their insurance. This would involve filing a claim or legal action against the transporter.
### **Summary**
1. **GST on Invoice**: You are liable for GST on the sale as per the invoice issued, regardless of the loss during transit.
2. **Adjustments**: Issue a credit note for the lost goods, reverse ITC for the lost goods, and report the changes in your GST returns.
3. **Documentation**: Keep thorough records of the loss, insurance claims, and communications.
4. **Legal and Insurance**: Seek compensation through insurance and consider legal action if necessary.
Handling the situation promptly and accurately ensures compliance with GST regulations and minimizes financial impact.
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