we received advance money of 25 Lacs before GST act i.e July 2017 (at the time of Gujarat VAT) for agreement of manufacturing of machines of rs 1 cr as per agreement client has to pay 75 lacs within stipulated time but he failes to do the same and he dose not required this machine now and we have expeseses of rs 50 lacs related to machines manufacturing .. ? on 25 lacs GST would be applicable? we need to reverse all ITC taken at the the of manufacturing of machines? machine is now on scrap conditions no more sale order received for this
25 Lac rs received as advance at the time of Gujarat VAT act this amount is no need to pay back to purchaser is it our income?
It is a very good question. It actually depends on the terms of contract. If it is treated as capital receipt then not taxable if not a capital receipt then taxable under gst.
You should go for proper legal opinion.
You can also dm me
CAclubindia
