Debit note

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2017 Greetings of the day !

I need clarification on below Issue :

M/s ABC (registered person) purchased goods from M/S XYZ (registered person) before January 2017 (suppose in November 2016) under VAT regime.
Now M/S ABC are returning said goods in November 2017 to M/S XYZ and issue Debit note with GST taking existing rate of GST (Let Value 100,000/- and GST 12,000/- = 120,000/-), while M/S XYZ is not considering GST amount and issue Credit note (Value 100,000/- GST- Nil).

1. Whether the above entry in the books of XYZ is correct ?
2.Whether the above entry in the books of ABC is correct ?
3. Whether M/S ABC is required to pay GST (INR 12,000/-) from own pocket ?
4. Whether M/S XYZ is not entitled to Input Credit of INR 12,000/- ? (I think no, because original sale was made 6 months earlier of appointed date)

Udaya Chandran

Udaya Chandran (Expert)
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02 December 2017 When the registered person returns the goods supplied pre GST and returned post GST, it is considered supply only. GST will be applicable for such supply as fresh sales.

RAJA P M

RAJA P M (Expert)
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02 December 2017 In my view it's exactly wrong and also we consider old regime with new regime...... Debit Note or Credit Note is under same tax regime then no need any doubts and we ll debit / credit SAME TAX. But, Now the situation it's changed. So, Thay ll prepare it's GST Tax invoices. If they are giving debit note for the purchase of VAT regime then no way for reversal of Tax. So, you ll give GST Sales Tax invoice instead of Debit Note (VAT purchase)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2017 What have to do with old stock which were purchased before 1st January 2017 (i.e. more than 6 months elapsed from appointed date). Please refer Section 142 (12) of CGST act along with its proviso. (Where proviso is talking about registered person whereas time limit is provided in section)

RAJA P M

RAJA P M (Expert)
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02 December 2017 Yes... You are exactly correct. But, Can't deal with Credit Note or Debit note for above said material return... Bcoz, we ll understand what is debit note and Credit note or Purchase return and Sales return... It means when a goods are retired to supplier then we will make reversal for same tax invoices. In case the buyer ll be returned the goods then he follow the purchase invoice which is VAT regime. The buyer ll be give Purchase return with VAT tax... Now no way for taken credit X debit in VAT tax to both end... Now the situation GST is ongoing. So, the return ll be consider as GST Sales with GST Tax. It's good for both side....

Udaya Chandran

Udaya Chandran (Expert)
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04 December 2017 Since there is ample time for the buyer either to accept or reject (more than 6 months) such sales is considered for tax (on approval basis).

RAJA P M

RAJA P M (Expert)
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04 December 2017 6 months or 1 month is not a matter. How ll be create Debit note with reference. If create debit / credit note then we will give the reference for materials supplied invoices. Above said way the invoice is VAT regime then they will give Debit note with VAT then only it's debit as per VAT invoice... So, we ll consider current scenario...