EXAMPLE-147

 Alpha Ltd had cleared certain goods valued at Rs. 5 Lakhs  on payment of central excise duty at Rs. 62500 and VAT at Rs. 28000 on 25 Feb, 2017. The Duty paid goods were received back by the manufacturer on 10 August, 2017i.e. after the appointed date.

(a) How to treat the duty element on the returned goods by registered person.

(b) How to treat the duty element on the returned goods by unregistered person.

Answer

As per Section 142(1) where any goods on which duty had been paid under the existing Law at the time of removal not being earlier than six month prior to the appointed day are returned to any place of business on or after the appointed day, the registered person shall eligible for refund of duty paid under existing law, where such goods returned by .unregistered person. Such goods should have been returned with in 6 month from the appointed day and should be identifiable to the satisfaction of the proper officer.

If the goods are returned by a registered person then returned of such goods shall be deemed to be supply under GST.

In view of above legal transitional provision:-

(a) Value of goods remains the same i.e. Rs.5 lakh.The person returning goods would issue invoice as a fresh supply on payment of tax at existing GST rate on such supply. Assuming the GST rate is 18 % then the supplier will pay GST of Rs. 90000 at the time of return of goods. Alpha Ltd. is eligible to take credit of Rs. 90000 subject to condition of section 16.

(b) In this case as the person returning the goods which were earlier duty paid is not registered can not issue taxable invoice. Thus Alpha ltd is entitled for refund of duty paid  amount involved at the time of initial clearance.