GST back in Purchase Return

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S S KALVI (Querist)
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26 February 2020 What is GST ruling for Purchase return of medicines. In which period GST has to be given back & in which not given back. And what about for expiry & breakage medicines return.

CA Anita Bhadra

CA Anita Bhadra (Expert)
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27 February 2020 In case of expired medicines , two options have been given (Circular 72/2018 dated 26-10-2018 )
1. Return of medicines can be treated as a fresh supply and effected under cover of tax invoice/ bill of supply.
The value of fresh supply will be equal to the value of the original supply made earlier.
The recipient of the returned goods will be eligible to claim Input Tax Credit (ITC) on the basis of such tax invoice.
If expired drugs are destroyed by the manufacturer, then he is required to reverse ITC availed on the return supply. The reversal is to be made on the ITC availed on such returned supply, and not on the original supply of goods.
Another option is to issue a credit note. The manufacturer/wholesaler may issue a tax credit note and the goods may be returned under the cover of a delivery challan. Accordingly, the manufacturer/ wholesaler will be able to claim a tax adjustment, subject to reversal of credit by the recipient of tax credit note.
The said credit notes are to be issued before September following the end of the financial year. In case the said credit notes are not issued within the said deadline, a commercial credit note may be issued by the manufacturer/ wholesaler.