CREDIT NOTE IN GST

[NAMAN DOKANIA]

Is GST Leivable on Financial Credit Note recevied from supplier due to the fact, that it relates to the following:-

1. Early Payment.

2. Turnover Discount

3. Selling the purchased goods at a discount to retailer.

4. Other Incentive

[KASTURI SETHI]

Serial No1 and 2 fall under the category of post-sales discount. The assessee will have to conform to the conditions laid down under Section 15(3)(b) of CGST Act and serial no.3 & 4 fall under promotional schemes. These are incentives and taxable.

[Amit Agrawal]

Wherever any of these financial credit-notes are in nature of post-sale discount (which includes Early Payment & Turnover Discount), conditions laid down under Section 15(3)(b) of CGST Act will comes into play as rightly observed by Ld. Shri Kasturi Sethi Ji.

However, even if they in nature of post-sale discount confirming the conditions laid down under Section 15(3)(b)(i) of CGST Act, issuance of credit-note with GST u/s 34 (1) is optional at end of the supplier.

Moreover, gst cannot be levied upon buyer for any 'post-sale discounts' received from supplier, irrespective of whether the conditions laid down under Section 15(3)(b) are fulfilled or not.

In my humble view, without going through entire agreement and arrangement between OEM / supplier and distributor / buyer about these promotional scheme/s, it is not possible to answer this query with regards to Point no. 3 (i.e. Selling the purchased goods at a discount to retailer) & 4 (i.e. Other Incentive).

These points (No. 3 & 4) are constant areas of dispute between assessee and Department where 'mutuality of business interest' between supplier / OEM and buyer / distributor is bone of contention.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.

AI Summary

Debate on GST Applicability to Financial Credit Notes: Post-Sale Discounts vs. Promotional Schemes Under Section 15(3)(b) of CGST Act A forum discussion addressed whether GST is applicable to financial credit notes received from suppliers for reasons such as early payment, turnover discounts, selling goods at a discount, and other incentives. One participant noted that early payment and turnover discounts are post-sales discounts subject to conditions under Section 15(3)(b) of the CGST Act, while selling at a discount and other incentives are promotional schemes and taxable. Another participant agreed but emphasized that issuing credit notes with GST is optional for suppliers, and GST cannot be levied on buyers for post-sale discounts. The applicability of GST to promotional schemes remains contentious.