Circular to clarify the procedure in respect of return of time expired drugs or medicines

Return of time expired goods: options to treat returns as fresh supplies or by credit note, affecting input tax credit entitlement.

Return of time-expired pharmaceutical goods may be treated either as a fresh supply-where a registered non-composition taxpayer issues an invoice and the recipient may claim Input Tax Credit subject to Section 16, or as a return effected by issuance of a credit note under section 34, with tax adjustment available only if the credit note is issued within the statutory time limit and the recipient has not availed or has reversed ITC. Destruction of returned goods requires reversal of ITC under clause (h) of sub section (5) of section 17, applied to the ITC claimed on the return transaction or attributable to manufacture as appropriate.