Credit Note as per section 34 of CGST 2017

[SARAVANAN RENGACHARY]

Hi,

Customer has deducted 2% on total invoice value towards late supply (Liquidity Damage). Can we issue Credit Note and adjust the tax liability.

regards

saravanan.

[Rajagopalan Ranganathan]

Sir,

According to Section 34 (1) of CGST Act, 2017 "where a tax invoice has 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 a credit note containing such particulars as may be prescribed.

The above provision does not cover the situation mentioned by you. In my opinion your case may be covered by the provision "where goods or services or both supplied are found to be deficient, "

Similarly, according to Section 34(3) of the same act "Where a tax invoice has 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 be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed.

In my opinion your customer has to raise a debit note on you for deduction of 2% of invoice value for late supplying.

[Ganeshan Kalyani]

In GST, credit or debit note has to be issued by supplier.

[Nash Industries I Pvt Ltd]

Customer to raise a debit note charging - deemed supply -to do an act (item 5e of Schedule II of CGST Act).

AI Summary

Clarification Sought on Issuing Credit Notes for 2% Deduction Due to Late Supply under CGST Act, 2017 Section 34(1) A user inquired whether a credit note could be issued and tax liability adjusted for a 2% deduction by a customer due to late supply under the CGST Act, 2017. One response indicated that Section 34(1) might not directly cover this situation but suggested it could fall under 'deficient supply.' Another response clarified that the supplier must issue credit or debit notes, while a third response advised that the customer should raise a debit note for the deduction, referencing item 5e of Schedule II of the CGST Act.