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ITC Reversal or Not

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Anoop Bansal

student

199 Points Posted on 02 July 2020

Good Afternoon
Please advise in this case:

The entity is engaged in ice cream distribution has different GST Registration no. Receive Ice Cream from its Head Office (in another State) and further sold it to Big/small distributors in the state.
Some of its ice cream sold if infested with fungus, it compensates the distributor of loss by issuing them credit notes for the ice cream lost(verified by some authorised person) without giving any GST effect of the same.
I want to know whether there should be any ITC reversal on the goods lost as credit notes is issued for the same and no consideration towards it will be received in future for expired ice cream.

Thank You

Replies (2)

Quick Summary

This discussion addresses whether Input Tax Credit (ITC) needs to be reversed when an ice cream distributor compensates distributors for spoiled goods via credit notes. The consensus suggests that under Section 17(5) of the CGST Act, ITC reversal is indeed required for such losses. Furthermore, credit notes should be issued as per Section 34, with specific considerations for the time limit of issuance.

CA Rashmi B

Assistant Manager

787 Points Posted on 02 July 2020

The credit note can be issues with taxses. but the time limit for issuing CN is the due date of subsequent years September return. If that is crossed only financial credit notes to be raise i. e raising CN without taxes.