I. Statutory Provisions
142. (1) Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer:
Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply.
II. Understanding Provisions
A) Goods Return from Unregistered Person in GST
The section 142(1) provides refund of duty/tax paid on goods which was sold prior to 30-6-2017, but returned by an unregistered person to any place of business after 30-6-2017 subject to certain conditions as mentioned below :
(a) The appropriate amount of duty/VAT must have been paid at the time of sale/clearance of goods to the customer.
(b) The goods should have been supplied to the customer during the period 1-1-2017 to 30-6-2017.
(c) The goods shall be returned back within a period of six months from the appointed date i.e. upto December 2017 by the person other than registered person.
(d) The proper Officer shall be satisfied about the identification of the goods. It means should be satisfied that these are the same goods which have been cleared during the period 1-1-2017 to 30-6-2017and on which duty is paid.
(e) The goods can be returned back to any place of business. For example, the goods may be sold from depot at Nagpur. It can be returned back to other depot (say Bhiwandi) of the same registered taxable person.
If the above conditions are satisfied, refund of tax paid on such goods returned back will be available who has supplied earlier.
However if goods are returned after the period of 6 months from implementation of GST (i.e on or after 01.07.2017) then in such case it will be considered as deemed supply under the GST Act. Since the goods are returned by the person who is not registered in the GST Act then in such case tax will be payable under the reverse charge as per section 9(4) of the CGST Act by the person who has originally sold the goods and now receiving it back. The credit of tax paid on reverse charge will be available to such person.
B) Goods returned by Registered person
When registered person returns the goods then in such case such return will be considered as deemed supply (i.e GST will be levied) under the GST Act irrespective of when such goods are returned and person returning the goods will issue tax invoice to the person to whom the goods are returned and person receiving the goods will be eligible to take credit of the same subject to the eligibility and fulfilment of conditions for taking the credit.