GST Library

Login | Register

Best GST Library

Contact Us

Subscription Plans

GST News | Updates

GST Calendar

GST Diary

GST Case Laws

GST Notifications, Circulars, Releases etc.

Act & Rules

Act & Rules (Multi-view)

Act & Rules (E-book)

GST Rates

GST Rates (E-book)

HSN Classification

GST Council Meetings

GST Set-off Calculator

ITC Reversal Calculator

E-invoice Calculator

Inverted Duty Calculator

GSTR-3B Manual

GSTR-9 Manual

GSTR-9C Manual

GST Forms

Full Site Search

E-way Bill

Finance Bill 2024

GST Evasion in India

GST Videos


GST e-books

GST Domains Sale

About Us

Our Services

Contact Us

TaxReply India Pvt Ltd
®
Subscribe Free GST updates on...

Join on twitter

Join GST Group 120
Hindi
English

CBIC today issued a detailed circular to clarify the procedure to be followed in respect of return of time expired drugs or medicines. Though this circular has been issued to cover the matter of return of time expired drugs and medicines, however the same is also applicable in other cases of goods return by buyer.

The circular clarified that buyer / seller can follow either of two approaches at the time of return of goods:

(A) Return of goods to be treated as fresh supply:

a) In case the person returning the time expired goods is a registered person (other than a composition taxpayer), he may, at his option, return the said goods by treating it is as a fresh supply and thereby issuing an invoice for the same (hereinafter referred to as the, “return supply”). The value of the said goods as shown in the invoice on the basis of which the goods were supplied earlier may be taken as the value of such return supply. The wholesaler or manufacturer, as the case may be, who is the recipient of such return supply, shall be eligible to avail Input Tax Credit (hereinafter referred to as “ITC”) of the tax levied on the said return supply subject to the fulfilment of the conditions specified in Section 16 of the CGST Act.

b) In case the person returning the time expired goods is a composition taxpayer, he may return the said goods by issuing a bill of supply and pay tax at the rate applicable to a composition taxpayer. In this scenario there will not be any availability of ITC to the recipient of return supply.

c) In case the person returning the time expired goods is an unregistered person, he may return the said goods by issuing any commercial document without charging any tax on the same.

d) Where the time expired goods which have been returned by the retailer/wholesaler are destroyed by the manufacturer, he/she is required to reverse the ITC availed on the return supply in terms of the provisions of clause (h) of sub-section (5) of section 17 of the CGST Act. It is pertinent to mention here that the ITC which is required to be reversed in such scenario is the ITC availed on the return supply and not the ITC that is attributable to the manufacture of such time expired goods.

(B) Return of time expired goods by issuing Credit Note:

a) As per sub-section (1) of Section 34 of the CGST Act the supplier can issue a credit note where the goods are returned back by the recipient. Thus, the manufacturer or the wholesaler who has supplied the goods to the wholesaler or retailer, as the case may be, has the option to issue a credit note in relation to the time expired goods returned by the wholesaler or retailer, as the case may be. In such a scenario, the retailer or wholesaler may return the time expired goods by issuing a delivery challan. It may be noted that there is no time limit for the issuance of a credit note in the law except with regard to the adjustment of the tax liability in case of the credit notes issued prior to the month of September following the end of the financial year and those issued after it.

b) It may further be noted that if the credit note is issued within the time limit specified in sub-section (2) of section 34 of the CGST Act, the tax liability may be adjusted by the supplier, subject to the condition that the person returning the time expired goods has either not availed the ITC or if availed has reversed the ITC so availed against the goods being returned.

c) However, if the time limit specified in sub-section (2) of section 34 of the CGST Act has lapsed, a credit note may still be issued by the supplier for such return of goods but the tax liability cannot be adjusted by him in his hands. It may further be noted that in case time expired goods are returned beyond the time period specified in the sub-section (2) of section 34 of the CGST Act and a credit note is issued consequently, there is no requirement to declare such credit note on the common portal by the supplier (i.e. by the person who has issued the credit note) as tax liability cannot be adjusted in this case.

d) Further, where the time expired goods, which have been returned by the retailer/wholesaler, are destroyed by the manufacturer, he/she is required to reverse the ITC attributable to the manufacture of such goods, in terms of the provisions of clause (h) of subsection (5) of section 17 of the CGST Act.

3. It may be noted that though this circular discusses the scenarios in relation to return of goods on account of expiry of the same, it may be applicable to such other scenarios where the goods are returned on account of reasons other than the one detailed above.


Best-in-class
Digital GST Library
Plan starts from
₹ 3,960/-
(For 1 Year)
Checkout all Plans
Unlimited access for
365 Days
✓ Subscribe Now
Author:

TaxReply


Oct 26, 2018


Post your comment here !

Login to Comment


GST News (Updates)


  Read more GST updates...

28
Mar
S
M
T
W
T
F
S
10 Mar

☑ Monthly | GSTR-7

GSTR-7 for the m/o Feb 2024 (For TDS Deductors u/s 51 - Section 39(3)).

☑ Monthly | GSTR-8

GSTR-8 for the m/o Feb 2024 [For TCS collection by E-Commerce Operators - Section 52(4)].

11 Mar

☑ Monthly | GSTR-1

GSTR-1 for the m/o Feb 2024 (Monthly Taxpayers) - N.No. 83/2020.

13 Mar

☑ Monthly | GSTR-5

GSTR-5 for the m/o Feb 2024 [Return by Non Resident Taxpayers - Rule 63 - Section 39(5)]

☑ Monthly | GSTR-6

GSTR-6 for the m/o Feb 2024 [For Input Service Distributors - Rule 65 & Section 39(4)].

☑ Monthly | IFF

IFF for the m/o Feb 2024 (QRMP Taxpayers, Optional) - Rule 59(2).

20 Mar

☑ Monthly | GSTR-3B

GSTR-3B for the m/o Feb 2024 (Monthly Taxpayer - Rule 61) - Either Compulsory taxpayer > 5 cr. or Voluntary taxpayer < 5 cr.

☑ Monthly | GSTR-5A

GSTR-5A for the m/o Feb 2024 [Return by OIDAR Service Providers - Rule 64.]

25 Mar

☑ Monthly | PMT-06

PMT-06 Monthly tax payment for Feb 2024 under QRMP Scheme [Rule 61(1)(ii) - Proviso to Section 39(7)].

Taxpayers have a choice to pay tax either, as per -  

A) Fixed Sum Method OR 
B) Self assessment basis subject to interest on short payment of taxes.
(Notification No.85/2020 - CT)
 
28 Mar

☑ Monthly | GSTR-11

GSTR-11 for the m/o Feb 2024 (Statement of inward supplies by persons having Unique Identification Number (UIN)).

31 Mar

☑ Annual | CMP-02

Last date to opt-in from regular scheme to composition scheme under GST for FY 2024-25 [Rule - 3 of CGST Rules.]

☑ Annual | GTA

Closing Date of window on GST Portal for Opt-in / Opt-out for Forward Charge / Reverse Charge by GTA for FY 2024-25 [Notification No.06/2023 - CT(R) dated 26.07.2023]