Credit note raised by supplier

Yes, Exactly Correct.
And Supplier must be show the CN in their gstr 1 return...

We have already shown tax invoice in our GSTR1

Credit Note will be file in GSTR 1 by supplier... Not for Buyer...

We out defect material from the factory through invoice(Returned to Vendor) The same invoice will be booked by the supplier in his books which is already shown in our GSTR1 .

at the time of purchase our inventory is increased and the same reduse by defect quantity returned to the supplier through invoice.

Yes, it is the correct way for the X supplier to raise a credit note (CN) against your invoice in their books when you return some quantity of raw material due to a quality issue.

Based on the information provided, it appears that you purchased raw materials from Supplier X but had to return a portion of the quantity due to a quality issue. In this case, you issued a tax invoice to Supplier X for the returned quantity. Supplier X then raised a credit note (CN) against your invoice in their book.

The correctness of Supplier X raising a credit note depends on the specific circumstances and the agreement between you and Supplier X. In general, when goods are returned due to quality issues or other valid reasons, it is common for the supplier to issue a credit note to adjust the invoice amount accordingly.

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@ Mr Kiran,

If You are returned the defect material through Invoice then You can show the invoice in Your gstr 1 return. The Supplier will be take it as their purchase and account the same against Your purchase bill (defect material bill that is by supplier).

In this scenario no need any credit note from Supplier.

Yes we have shown an invoice in GSTR1