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purchase return of defective goods
xyz supplies goods to ABC.
goods are found defective.
ABC has to return goods to xyz.
ABC issues a debit note adding gst and recovers the same from xyz.
ABC pays that gst to authorities.
is it so ?
In real business there are many realities as far as returns are concerned. Let us examine sales returns of defective goods. The way in which it would happen are as under:
1. Goods inwarded and rejected in production process. Goods not returned but scrapped. a) Buyer indicates reversal of credit in GSTR. Automatically the liability of the buyer gets adjusted. Seller issues debit note with GST b) Buyer just informs. Seller can raise only debit note ofr value without GST. c) Alternative buyer raises an invoice for rejection with or without GST for scrapping at his end. Seller loses the credit as material is not received.
2. Goods not inwarded rejected due to quality defect. Goods not returned but scrapped. Credit not availed by buyer at all. Seller loses credit.
In both above cases if defective goods are returned then the seller would be eligible for correction of invoice if no credit availed at buyer end. A good practicel alternaitve is to send the goods for reapir/ processing to seller under sec. 143- job work. Only quanityt records need to be maintained.
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