raising an invoice instead of supplier issue credit note under gst

[Abhijeet Mane]

The supplier has billed for goods supplied, and subsequently provided a discount for prompt payment (the discount conditions are outlined in the agreement).

Whether the receiver can raise a invoice to the supplier to claim the benefit of said discount, rather than the supplier issuing a Cr. note. If yes what type of service should the supplier indicate on invoice?

[Ganeshan Kalyani]

Section 34 allows supplier to issue credit note or debit note as the case may be. In view of said section recipient cannot issue credit note or debit note from GST point of view. From accounting point of view, yes, the recipient can issue the document.

[Sadanand Bulbule]

Dear querist

I endorse the clarification of Sh. Kalyani Sir.

[Raam Srinivasan Swaminathan Kalpathi]

Foremost, the amount received is only a cash discount and outside the purview of GST. Secondly, as has been correctly pointed out if the recipient issues a debit note then it is only an accounting debit note and will have no relevance to GST.

Thirdly, there is no necessity for a supplier credit note or a customer debit note as you are only booking an income in your books. Who will question?

[Pradeep Reddy Unnathi Partners]

I assume that the discount proposed to be extended is in line with the conditions are outlined in the agreement. If yes,

Option 1: Supplier can issue a GST credit note, to pass on the discount to the recipient. In such a case supplier can adjust GST mentioned in the credit note against his GST liability of the month in which such credit note issued and the recipient has to reverse ITC to the extent mentioned in the credit note.

Option 2: Supplier can issue a commercial/financial credit note without mentioning GST therein. In such a case there shall be no impact on GST liability of the supplier or ITC availed by the recipient.

Supplier may choose option 2, even when the discount is not inline with the agreement.

[Shilpi Jain]

In the first place why even worry for a GST credit note. Tax invoice was issued by supplier and ITC availed by recipient.

Subsequent discount can be by way of a financial CN also.

Recipient cannot issue tax invoice since it is not a case of return of goods.

AI Summary

Supplier credit note allows GST adjustment; recipient cannot issue GST credit, financial credit note is alternative. The supplier is the proper issuer of GST credit or debit notes; recipient-issued documents have no GST effect and are only accounting records. Supplier may issue a GST credit note to adjust output tax and require recipient to reverse ITC, or issue a financial credit note omitting GST which leaves tax liabilities and ITC unaffected.