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TMI BlogTreament of GST in case of issue of credit noteX X X X Extracts X X X X X X X X Extracts X X X X ..... Treament of GST in case of issue of credit note X X X X Extracts X X X X X X X X Extracts X X X X ..... and specifically linked to relevant invoices; and input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. As per sec 34. (1) -Credit & Debit Notes : A supplier may issue to the recipient a credit note for a post sales discount subject to the condition that no reduction in output tax liability of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. Explanation to Rule 89(2) provides that where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer. Section 12B of the Central Excise Act provides that every person who has paid the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. Facts: * In the case of refund of GST & Excise where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer. However there is no su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch presumption while reducing the liability to GST due to issue of credit note. The only requirement is that the input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. Question At the time of assessment how would the supplier prove that the input tax credit as is attributable to the discount on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of document issued by the supplier has been reversed by the recipient of the supply. There is no way for the supplier to verify it from the recipient. In such a case what will be the consequence if the supplier takes anyone of the following meaures: * The supplier issue the credit note only for the amount of discount and not for GST. This will ensure that amount of GST recovered from the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumer against the original invoice has actually been received by the Government. The supplier should issue the credit note with the disclaimer that by accepting this credit note the recipient confirms that the incidence of tax on such supply has been not passed on to any other person. However this will be a question of fact subject to evidence. My personal view is that the reduction of such G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST never reaches the consumer who are not identifiable post sales particularly in case of retail sales. Thus the doctrine of unjust enrichment will prevail in such a case Your expert views on this subject shall be highly appreciated. Reply By CA.LALIT MUNOYAT as = While the supplier can check the reversal by the recipient on matching of the monthly returns, the question now boils down to is &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;How to ensure that the incidence of tax has not been passed to any other person"
Dated: 20-5-2018 X X X X Extracts X X X X X X X X Extracts X X X X
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