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Damage and expired.

01 July 2021

hi, if the stock damaged and expired after the sale, on a credit note we will reduce tax liability or not.
for example, we had paid the tax liability on the sale and the buyer takes the input tax credit after that any expires and a sample of goods happens, the seller arises credit note with gst or without gst.

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7 Replies

CA Altamush Zafar (GST Consultant) (15907 Points)
Replied 01 July 2021

That will depend upon the agreement between the parties.

SUMIT BADYAL (709 Points)
Replied 01 July 2021

There is no agreement with the party.

veerendar singh (tax consultant) (3301 Points)
Replied 01 July 2021

My understanding of the facts:
you sold goods
buyer returned few damages goods

opinion:
on receiving returned goods the seller will issue credit note with gst. on the basis of the seller's credit note the buyer would reduce his itc.

please correct me if i have conceived the facts wrongly

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Imthias ahamed Kormath (910 Points)
Replied 01 July 2021

Seller may returned to the manufacturer,who may issue credit note to the seller.itc mareduce, manufacturer may treat it as damaged,but,a refund of same may can claim,if any limitations exist in this regard?

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 02 July 2021

The time Expired Goods are Drugs or Medicine & such practice of return of expired goods are done in pharmaceutical sector

Generally such goods return back to manufacture & the same are destroy by manufacturer.

As per Section 34(1) of CGST Act the supplier can issue the Credit Note where the goods are return back by Recepient. , Thus the Manufacturer supplied goods to Wholesalers/Retailer , issue Credit Note in relation to time Expired goods return by the Recepient (wholesaler/Retailer) . In such scenario the Recepient deliver the Expired goods to manufacture on Delivery Challan.
It may be noted if the credit note issued
within the *TIME LIMIT specified in section 34(2) CGST Act , the tax liability may be adjusted by Supplier (Manufacturers) & ITC need to be reversed by Recipient (Wholesaler/Retailer)

However if the time limit specified in said section is lapsed, a credit note may still be issued by supplier for such return of goods but the Tax liability cannot be adjusted & ITC cannot reversed . so there is no requirement to declare such credit note on Return (GSTR1 3B)

* Time limit : Adjustment of CNTs issued prior to the month of September following the end of FY

Note :
The alternative method to return the time Expired goods is by issuing fresh tax invoice for details kindly refer Circular 72/46/2018 GST , DT. 26/10/2018

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Santosh Salvi (3 Points)
Replied 19 January 2024

hi,

What if the manufacturer/supplier does not accept expired/damage goods in such a scenario is the distributor liable to pay any gst?

RAJA P M ("Do the Right Thing...!!!") (127196 Points)
Replied 19 January 2024

It's based on the aggreement/contract...
May be the conditions apply as Mfg to Distributor and Distributor to Retail seller...

If there are any deals then it must be returned...
otherwise it can be simply leave...