GST ON QUERY

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K Kasiraman

Tax Consultant

67 Points Posted on 15 December 2025

We supplied goods to Party A, who is located in Delhi, and we have duly reported this supply in our GSTR-1.

Subsequently, the customer issued a Debit Note towards rate difference without GST. The customer has already availed ITC on the original purchase invoice.

However, we issued a Credit Note with GST against the output tax already paid and accordingly reduced our output tax liability. Now, the customer has received a notice from the GST Department, asking them either to pay the tax amount or to submit a declaration duly certified by an auditor.

In this regard, we seek clarity on the appropriate course of action. We are not willing to issue an auditor-certified declaration.

Replies (4)

Quick Summary

A business supplied goods and reported GST, but the customer issued a debit note for a rate difference without GST. The customer had already claimed ITC. The supplier issued a credit note with GST, reducing their output tax. Now, the customer received a GST notice. The supplier seeks guidance on how to proceed, preferring not to issue an auditor-certified declaration and exploring options like the customer reversing ITC.

Aashok Kumar Sharma

Finance/Compliance Consultant

77979 Points Posted on 16 December 2025

Customer reverses ITC (Best & clean solution)

Customer reverses GST ITC relating to rate difference
Interest may apply (minimal)
Matter gets closed

✔ No auditor certificate required
✔ Fully compliant with Section 34

K Kasiraman

Tax Consultant

67 Points Posted on 16 December 2025

Sir,

can you sharme me the Section 34 i have but this portion i am not getting

RAJA P M

"Do the Right Thing...!!!"

77833 Points Posted on 19 December 2025

Hello Mr. K Kasirajan,

You are not give more details. When it's happened???

Bcoz, It's in this CY then it will be close simply with CN/DN.

If it's PY then it will be payable as per notice issued by GSTN.

Rushabh

Automation Expert

10733 Points Posted on 14 November 2026

If your credit note genuinely reduced the taxable value or GST payable on the original supply, the customer’s ITC must be reduced to the corresponding extent. Under section 34(2) of the CGST Act, the supplier’s output-tax reduction is conditional on the recipient reversing the attributable ITC (or not having availed it). The customer should therefore reverse the excess ITC and pay any applicable interest, then respond to the notice with the credit note, your GSTR-1/GSTR-3B evidence and proof of the reversal/payment. The customer’s debit note without GST does not, by itself, remove this requirement.

You need not issue an auditor-certified declaration merely because the department has requested one. The customer can explain that the supplier’s credit note was reported and the related ITC has been reversed, supporting this with available records. If the customer disputes the credit note’s tax treatment or the notice seeks a prescribed declaration under a specific provision or procedure, the notice’s exact wording and tax period should be checked before responding.

This issue is best handled by reconciling the credit note, supplier tax reduction and recipient ITC reversal for the relevant period. Manual reconciliation and notice-response work can be difficult; automation reduces repetitive tasks while professional judgment remains in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. WhatsApp us to explore a smoother compliance workflow: https://wa.me/message/3HVOZ7HIY4ESC1