Credit note and resale of goods for which credit note was issues

Eway Bill 121 views 3 replies

Fun Gang Admin

14 Points Joined March 2021

Hello All,

We are into textile manufacuring, and almost 100% of my sales is bill to ship to basis as the cloth from our factory goes to dyeing house from processing. We are in a situation wherein sometimes goods are returned/not accepted by the buyer but goods have reached dyeing house.

So the situation is that i sold goods to party ABC and shipped it to dyeing house PQR, after quality test party ABC rejected our goods, now the goods are lying the dyeing house PQR, so I contact party XYZ and convince him to buy the goods, party XYZ agrees for the same and I issue an bill to ship to invoice without eway to the new party i.e party XYZ cause goods are in the dyeing house & there is no movement of goods, and i also issue credit note to party ABC.

Now the officer is saying how can you take credit of gst cause ewaybill was not issued when i issued the credit note, buyer XYZ will also feel insecure as his purchase is without ewaybill number.

What to do in such a situation ? There is no moment of goods in this resale, hence ewaybill is not applicable. Also we issue e-invoice as our turnover is above 5cr.

Replies (3)

Rama chary Rachakonda

Master in Accounts & high court Advocate

8756 Points Joined December 2011

A complex scenario involving credit notes, resale, and e-way bills! Key Points

1. *Goods were sold to Party ABC*: Goods were shipped to a dyeing house (PQR) on a bill-to-ship-to basis.

2. *Goods were rejected by Party ABC*: Party ABC rejected the goods, which remained at the dyeing house (PQR).

3. *Goods were resold to Party XYZ*: You convinced Party XYZ to buy the goods, and a bill-to-ship-to invoice was issued without an e-way bill.

4. *Credit note issued to Party ABC*: A credit note was issued to Party ABC. Officer's Concern The officer is questioning how you can take GST credit without an e-way bill when issuing the credit note. Solution In this scenario:

1. *No e-way bill is required*: Since there is no movement of goods during the resale, an e-way bill is not applicable.

2. *Credit note is valid*: The credit note issued to Party ABC is valid, as it relates to the original sale.

3. *GST credit can be claimed*: You can claim GST credit on the original sale, as the credit note is valid.

4. *Inform Party XYZ*: Inform Party XYZ that the resale is legitimate, and the goods were originally sold to Party ABC.

Recommendations

1. *Maintain proper documentation*: Ensure all documentation, including the credit note, invoices, and communication with parties, is properly maintained.

2. *Explain the situation to the officer*: Provide a clear explanation of the situation to the officer, highlighting the lack of goods movement during the

Fun Gang Admin

14 Points Joined March 2021

Thanks for your detailed answer, can i make ewaybill only with part-a filled (only for records) for the new sale invocei. Bill to XYZ Ship to dyeing house PQR bill from MY COMPANY NAME ship to dyeing house PQR