Tax impact on goods sold bfr gst & sales rejection after gst
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 May 2018
Dear Sir,
Pls tell me what will be the entry for goods sold before GST & sales rejection after GST.
Party issued us Rejection Note with Excise Duty & CST charged.
Whether to accept Exceise rejection note after Jul'17? & If yes how to take Its entry of this type of Rejection Note in accounting?
Pls suggest urgently.
Pls tell me what will be the entry for goods sold before GST & sales rejection after GST.
Party issued us Rejection Note with Excise Duty & CST charged.
Whether to accept Exceise rejection note after Jul'17? & If yes how to take Its entry of this type of Rejection Note in accounting?
Pls suggest urgently.
Guest
Guest
(Expert)
02 May 2018
See this video to understand the impact of this transaction
https://youtu.be/smhzufhQFG4
26 July 2025
This is a common issue when transactions span the GST rollout period (July 1, 2017).
### Key points:
* **Goods sold before GST (pre-July 2017)** were subject to **Excise Duty and CST**.
* **Goods rejected after GST rollout (post-July 2017)** means the rejection note may still mention Excise Duty and CST, but these taxes are now replaced by GST.
* **Whether to accept Excise rejection note after July 2017?**
Technically, **excise duty is abolished from July 1, 2017**, so rejection notes mentioning excise duty after this date are inconsistent with the law. However, the rejection relates to goods sold before GST, so it’s a reversal of a pre-GST sale.
### How to treat such rejection notes:
1. **Accept the rejection note** as it pertains to the original sale which was pre-GST.
2. Record reversal entries for the sale including the **Excise Duty and CST components** as per the original invoice.
3. **Accounting entry for rejection:**
* Debit Sales Returns (or Sales Account)
* Debit Excise Duty Payable (reverse excise duty portion)
* Debit CST Payable (reverse CST portion)
* Credit Debtor/Party Account (reduce amount receivable from party)
4. Since rejection is post-GST, do **not apply GST** on the rejection note.
### Summary:
* Accept the rejection note but reverse the transaction on **Excise & CST basis only** (no GST applicable).
* Make sure you maintain proper documentation to justify these entries in case of audits.
* Confirm with your tax advisor if your company is maintaining dual accounting for pre & post GST periods.
### Key points:
* **Goods sold before GST (pre-July 2017)** were subject to **Excise Duty and CST**.
* **Goods rejected after GST rollout (post-July 2017)** means the rejection note may still mention Excise Duty and CST, but these taxes are now replaced by GST.
* **Whether to accept Excise rejection note after July 2017?**
Technically, **excise duty is abolished from July 1, 2017**, so rejection notes mentioning excise duty after this date are inconsistent with the law. However, the rejection relates to goods sold before GST, so it’s a reversal of a pre-GST sale.
### How to treat such rejection notes:
1. **Accept the rejection note** as it pertains to the original sale which was pre-GST.
2. Record reversal entries for the sale including the **Excise Duty and CST components** as per the original invoice.
3. **Accounting entry for rejection:**
* Debit Sales Returns (or Sales Account)
* Debit Excise Duty Payable (reverse excise duty portion)
* Debit CST Payable (reverse CST portion)
* Credit Debtor/Party Account (reduce amount receivable from party)
4. Since rejection is post-GST, do **not apply GST** on the rejection note.
### Summary:
* Accept the rejection note but reverse the transaction on **Excise & CST basis only** (no GST applicable).
* Make sure you maintain proper documentation to justify these entries in case of audits.
* Confirm with your tax advisor if your company is maintaining dual accounting for pre & post GST periods.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- House Property Reporting in ITR
- TDS Claim year
- Liable to deduct tds and 44ADA
- TDS Challan Code
- Refund of 20%pre-deposit paid for stay application
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- Rent lease agreement
- Merchant Export Accounting
- Agriculture income or business income
- Internship/Academic shown in Salary Pay Slip of a Doctor
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
