Replacement (not warranty) of goods with Zero invoice


(Querist)
04 December 2019
Company sold material to the customer, he received damaged material and he rejected, rejected material return to the factory, again company sent the good material to the party with Zero invoice. my query is Zero invoice is correct or we have to issue credit note to the customer and again issue fresh invoice ??


JATIN DUGGAL (Expert)
05 December 2019
As in your case it seems that goods are sent on FOR basis means the risk of loss of goods in transit is yours, in such case, for earlier supply credit note has to be issued and for sending material again new invoice needs to be raised accordingly.

With respect to goods damaged, if these are capable of being used again with repair etc then no issue as will be removed on payment of tax at the time of sale in future, in case goods are not capable of being used i.e. totally destroyed, then ITC needs to be reverse as per Section 17(5)(h) of CGST Act, 17.

CA Dileep Surya Kumar (Expert)
05 December 2019
There are two options.

1. Ideally customer has to issue Tax invoice for the rejected material , vendor can take the credit for the same and
can issue fresh invoice.

2. If customer returned the goods with DC & waybill, vendor has to issue Credit note & fresh invoice to be issued.

g kranthi kumar (Querist)
05 December 2019
Thanks for your replay

Customer sent rejected material in his letter head (not his invoice), mentioning that qty of rejected material, company accepted the material and replace with good items with zero value of invoice.... is this process is correct ?? can you please provide the sections for reference..

g kranthi kumar (Querist)
07 December 2019
Customer sent rejected material in his letter head (not his invoice), mentioning that qty of rejected material, company accepted the material and replace with good items with zero value of invoice.... is this process is correct ?? can you please provide the sections for reference..


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