credit note

[srinivasulu m]

I have issued B2B invoice on services but the recipient has not given the tax amount now can I give a credit note if so can I give a credit note for the tax amount?

[Padmanathan KV]

Please peruse section 34 (1) which reads as under:

34. (1)Where one or more tax invoices have 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 one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.

(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than the thirtieth day of November following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

Considering the above provisions, it does not seem like a fit case to issue a credit note provided under section 34 (1). The recourse in your case would be to initiate legal actions against your recipient.

AI Summary

Credit note issuance limits: cannot reduce supplier output tax when tax incidence passed; pursue legal recovery instead.
Section 34 permits a credit note when an invoice's taxable value or tax charged exceeds the tax payable, when goods are returned, or when supplies are deficient; credit notes must be declared in the supplier's return by the specified deadline and tax adjusted as prescribed. No reduction in output tax is allowed if the tax incidence and interest have been passed to another person. Where a B2B recipient has not paid the tax amount, the facts do not fit section 34's grounds for issuing a credit note and the supplier's recourse is contractual or legal action against the recipient.