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CA Final · Indirect Tax Laws · Miscellaneous Provisions (GST)

Ravi Traders, a registered person in Pune, sold goods on approval to Mehta Stores on 10 January, which was two months before the appointed day. Mehta Stores rejected the goods and returned them to Ravi Traders four months after the appointed day. The goods are taxable under the GST Act. What is the GST position under the transitional provisions?

No tax is payable. Goods sent on approval not earlier than six months before the appointed day, and rejected and returned within six months from the appointed day, attract no GST. Both time limits are satisfied here, so neither party owes tax.

  1. ANo tax is payable, because the goods were sent on approval within six months before the appointed day and came back within six months from the appointed dayCorrect
  2. BTax is payable by Mehta Stores, because the goods were returned after the appointed day
  3. CTax is payable by Ravi Traders, because the goods were not returned before the appointed day
  4. DTax is payable by Mehta Stores unless the Commissioner grants an extension of two months

Explanation

Goods sent on approval not earlier than six months before the appointed day and returned within six months from the appointed day attract no tax. Here the dispatch was two months before and the return was four months after, so both conditions are met. Option B wrongly treats any post-appointed-day return as taxable.

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