GST is being paid to the ATO, and is thus not included in the valuation of the inventory itself. Of course, when a business purchases inventory, it must debit its GST Clearing account as the liability to the ATO decreases. In this case, the Bank/Accounts Payable (depending on whether the transaction was a cash/credit purchase) is credited by both the value of the inventory itself + the GST. However, in the inventory card, we are looking at the value of the inventory that the business has on hand, and GST is not included in this.
Sorry if this has any errors, I'm talking off the top of my head.
