Receipt of replacement Material under Warrenty

[Manjunath S]

Dear Experts,

We are a registered Manufacturers in Karnataka,

In July 2018, We Purchase a Machinery spares by paying IGST, after installation of that spares, it is get damaged within10 days, but actual warranty for that material is 1 year.

We intimated the supplier and he agreed to give replacement, and he told us to scrap that material since it is UnRepairable/Exposed.

Now he is supplying New Material with Another Tax invoice with IGST and giving Credit Note only for the Basic Amount for the rejected material.

My Query is:

a) Is this Procedure is correct ?

b) Is it require to reverse IGST Credit availed from us for the rejected material ? but supplier issuing Credit note only for Basic Amt.

Kindly explain in detail about the procedure to be followed in these type of issues.,

Thanks in advance.

Regards,

Manjunath S

AI Summary

Manufacturer's IGST Query Resolved: Supplier to Issue Credit Note Including GST, ITC Based on Replacement Invoice A manufacturer in Karnataka purchased machinery spares, which were damaged within 10 days despite a one-year warranty. The supplier agreed to replace the spares and issued a credit note for the basic amount, not including GST. The manufacturer queried if this procedure was correct and whether they needed to reverse the IGST credit. Experts advised that the supplier should issue a credit note including GST, and the recipient should not avail of ITC on the initial invoice. The replacement should be on a new invoice with GST, and ITC should be based on the replacement invoice. The procedure was deemed correct by experts.