Goods Sold Not Accepted by ConsigneeReturn Consignment Not Accompanied by Credit NoteValidity of Detention Under Section 129D. Ramachandra Rao

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The Tax Publishers GST--Detention of Goods and Conveyance in Transit Goods Sold Not Accepted by Consignee--Return Consignment Not Accompanied by Credit Note--Validity of Detention Under Section 129 D. Ramachandra Rao The learned author seeks to make analytical study of the issue as to whether where goods sold by the taxpayer is not accepted by the consignee and the goods are returned back by generating separate e-way bills, the same can be detained merely on the ground that the return consignment was not accompanied with the credit note. 1. Need of issuance of credit note The provisions relating to issuance of credit notes are enshrined under section 34 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"). Sub-section (1) of section 34 provides that where one or more tax invoices have] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed. The particulars to be contained in a credit note are prescribed under rule 53 of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules"). As per sub-section (2) of section 34, any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than the thirtieth day of November following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed. It is provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. It is the clear from the above provisions that the requirement of issuance of credit note is for supplier of goods or services in the following cases, namely,- (i) where the taxable value or tax charged in a tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or (ii) where the goods supplied are returned by the recipient, or SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Detention of Goods and Conveyance in Transit

Goods Sold Not Accepted by Consignee--Return Consignment Not Accompanied by Credit Note--Validity of Detention Under Section 129

D. Ramachandra Rao

The learned author seeks to make analytical study of the issue as to whether where goods sold by the taxpayer is not accepted by the consignee and the goods are returned back by generating separate e-way bills, the same can be detained merely on the ground that the return consignment was not accompanied with the credit note.

1. Need of issuance of credit note

The provisions relating to issuance of credit notes are enshrined under section 34 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"). Sub-section (1) of section 34 provides that where one or more tax invoices have] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.

The particulars to be contained in a credit note are prescribed under rule 53 of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules").

As per sub-section (2) of section 34, any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than the thirtieth day of November following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed.

It is provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

It is the clear from the above provisions that the requirement of issuance of credit note is for supplier of goods or services in the following cases, namely,-

(i) where the taxable value or tax charged in a tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or

(ii) where the goods supplied are returned by the recipient, or