TaxTMI 
TaxTMI 
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.
Credit Note as per section 34 of CGST 2017
12 Sep 2017 
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Credit and debit note scope: supplier-issued adjustments limited to overcharging, returns or deficiencies; payor should raise debit note for deductions
A supplier may issue a credit note where an invoice overstates taxable value, or where goods are returned or supplies are deficient; this does not extend to a recipient's unilateral deduction for liquidated damages. Under the adjustment regime, understatement of taxable value requires a debit note. The appropriate practical response to an invoice deduction by a recipient is for the recipient to raise a debit note, while characterisation of the deduction may engage deemed-supply concepts under Schedule II. (AI Summary)
A supplier may issue a credit note where an invoice overstates taxable value, or where goods are returned or supplies are deficient; this does not extend to a recipient's unilateral deduction for liquidated damages. Under the adjustment regime, understatement of taxable value requires a debit note. The appropriate practical response to an invoice deduction by a recipient is for the recipient to raise a debit note, while characterisation of the deduction may engage deemed-supply concepts under Schedule II. (AI Summary)