30 May 2023
Books is selected for gst audit for period 2017-18. We are distributor of FMCG co. In each month company offer secondary scheme on various products to retailers. As a practice scheme amount is first deducted from the price of goods and then GST is charged. Company issues credit note for the amount of scheme passed through invoices as above.these credit note is without any GST charges. It is not uploaded on portal by supplier. We did not make any ITC reversal in this respect. The assistant commissioner computed tax @5% on the amount of credit note and issued notice under section as above to pay tax and interest on it. We refer circular no 92/11/2019-GST,but not accepted by him. Am I liable to pay as per demand. Pl suggest reply for it if I am not liable to pay tax on credit note.
09 July 2024
If you have received a notice demanding tax and interest on the credit notes issued by your supplier without GST charges, here are the steps you can take to respond effectively:
### 1. Understand the Issue Clearly - **Nature of Credit Notes**: Confirm that the credit notes issued by your supplier are indeed without GST charges, as per your explanation. - **Notice Details**: Review the notice carefully to understand the specific sections under which the demand has been raised.
### 2. Basis of Liability - **Circular No. 92/11/2019-GST**: This circular clarifies the treatment of discounts including post-supply discounts and their implications on GST liability. - **Relevance of Circular**: Ensure that the principles outlined in the circular (regarding valuation of supply after discounts) apply to your situation and support your case.
### 3. Preparation of Response - **Drafting the Response**: Prepare a detailed response addressing the following: - **Explanation of Credit Notes**: Clarify the nature of the credit notes issued by the supplier, emphasizing that they are post-supply discounts and not subject to GST. - **Circular Reference**: Cite Circular No. 92/11/2019-GST to support your position. Highlight that as per this circular, the discounts received by you (via credit notes) are excluded from the value of supply for GST purposes. - **No ITC Reversal**: Confirm that you have not claimed any Input Tax Credit (ITC) on these credit notes, which aligns with the treatment of post-supply discounts.
### 4. Supporting Documents - **Documents to Attach**: Include copies of relevant invoices, credit notes, and the Circular No. 92/11/2019-GST with your response. - **Legal Opinion**: If necessary, seek legal opinion from a GST expert or consultant to strengthen your response.
### 5. Submission and Follow-Up - **Timely Submission**: Ensure that your response is submitted within the specified timeframe mentioned in the notice. - **Follow-Up**: Follow up with the GST department after submission to track the progress of your response and clarify any further queries they may have.
### Conclusion Your reply should clearly articulate that the credit notes received are post-supply discounts, not subject to GST, and that you have not availed ITC on these credit notes. By providing a comprehensive response backed by relevant documents and circular references, you can effectively contest the demand raised by the Assistant Commissioner.
CAclubindia
