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

Post sale discount treatment: GST not leviable on buyer; supplier may optionally issue a credit note, while promotional incentives are taxable. Post sale discounts such as early payment and turnover discounts reduce the transaction value if they satisfy the statutory conditions and the supplier may optionally issue a credit note; GST should not be charged on the buyer for such discounts. Promotional incentives and downstream discounts to retailers are generally taxable unless the contractual and commercial arrangements demonstrate a reduction in the supplier's transaction value, a determination that requires factual analysis and is often disputed.