Issuance of debit notes

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 respected experts ,
I had a doubt with regard to issuance of debit notes to the vendors in case of lorry freight paid at unloading point on purchase of Raw materials.
In our company accountant is saying he need a confirmation letter from vendor for debiting his account in case of unloading charges paid on behalf of the vendor at factory. The unloading charges will amount to say Rs.1000-1500. where as the purchased amt of raw material amounts Rs.1 crore.
Is it the argument of accountant is tenable.
kindly giv me the reply.
thanks in advance.

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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17 October 2011 Actually a confirmation letter from the vendor will only help the accountant play safe, as he will have with him a valid documentary evidence for debiting the vendor which is viable. This will also come handy for future reference purposes.

However you can look at the history of the transaction with that vendor, and if similar adjustments have been allowed by the vendor at the time of making net payment, then there should be no objection from the accountant.

Querist : Anonymous

Querist : Anonymous (Querist)

18 October 2011 thank you sir.
In this same situation rate differences occur in purchase invoice. Then in that situation also accountant denying to raise debit note.He is asking confirmation letter from vendor side.Our purchase manager reverting that invoice to the vendor and asking them to send another fresh invoice after adjusting the price and tax rates but it takes time. My intention is why can't we raise a debit note from our(company) side and send it to the vendor.
please clarify my doubt.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 October 2011 Thanks in advance

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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18 October 2011 Get the confirmation over e-mail and pass the accounting entry immediately bases on the mail as an evidence.
Fresh incoice can be received in due course of time on a periodic basis.

And, there should be some rate variation clause in the purchase agreement/purchase order. So if the purchaser is demanding a rate change in line with the terms of the agreement/purchase order then there should be no confusion at all.

Debit note is not being raised probably to avoid sales tax complications, as you are changing the rate of material itself.

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