purchase return of defective goods
naveen khanna (35 Points)
01 October 2017
what would be the treatment for purchase return of defective goods and also sales return of defective goods
11 Replies
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 01 October 2017
You have to issue debit note or credit note respectively.
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 01 October 2017
Supplier will add GST in Debit Note or Credit Note & give adjustment at the time of filing return.
Ashit Sharma
(155 Points)
Replied 01 October 2017
well said " supplier", so in both cases only credit note has to be issued by their respective supplier. Regards.
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 01 October 2017
Yes only supplier has to issue credit note.....
naveen khanna
(35 Points)
Replied 01 October 2017
I am sorry. didn't understand.
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 ?
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 ?
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 01 October 2017
ABC will issue credit note in respect of such return.....
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 01 October 2017
Same will be given in his return & added in your liability ....
naveen khanna
(35 Points)
Replied 01 October 2017
but then xyz will end up paying gst twice on the same goods . once at the time of supply to ABC and again on receiving the goods back
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 02 October 2017
Sorry its xyz who issues credit note not abc
Madhukar N Hiregange
(Chartered Accountant)
(39039 Points)
Replied 02 October 2017
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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