Question

Theft of LED TVs of value say 10 lac rupees (inclusive of GST) took place in May 2018 from the business place of a person registered under GST. The Registered Person had taken ITC on the LED TVs. FIR was lodged with the Police, who traced the thief and recovered sale proceeds (Rs. 10,10,000/-) of the said TVs from the persons who had acquired possession of the stolen LED TVs from the thief but had sold the same to ultimate buyers. Insurance claim in respect of the theft was also filed with the concerned insurance company. In the first week of November 2018, the Police handed over the sale proceeds of the said stolen and sold LED TVs (Rs. 10,10,000/-) to the Registered Person. In this case the goods were stolen in May 2018. Had there been no recovery of goods or sale proceeds of stolen TVs, the Registered Person would have reversed ITC in terms of Section 17(5) (h) of the CGST/SGST Act 2017. As the stolen goods were not ‘supply’, neither any Tax invoice nor any other document was not issued by the Registered Person in May 2018. In my opinion, in this case the theft of LED TVs has acquired the character of ‘supply’ in November 2018 in terms of section 12(1)(b) of the CGST/SGST Act 2017 when the Registered Person received the payment of Rs. 10,10,000/- through the Police. The Registered Person can issue a single B to C Tax invoice in November 2018 giving details of the case in the invoice itself mentioning name of consignees as unknown persons and pay GST on the sale proceeds of stolen goods by treating the amount of Rs. 10,10,000/- as cum-tax received by the Registered Person from the police in November 2018. Please examine the issue at your end also and suggest how to account for the transaction under the GST law.

Answer

Following are 2 opinions by our different experts:

Opinion 1. Take ITC on the TV and issue a single B2C tax invoice as sale to unregistered person and charge GST on that.

Opinion 2. Since the TV was lost by theft, so you have rightly reversed ITC on that as per section 17(5).

Now you got money which is recovered by police. The money received is not against supply in course or furtherance of business.

So the recovered money should be considered as transaction in money and should not be subjected to tax as per definition of goods which specifically excludes money and securities. The said definition is reproduced below:

'goods' means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply
We are more inclined to opinion 2. (Reply dt.12/11/2018)