Credit note issued but not amended in GSTR1 return accordingly

[Sudhir Kumar]

One client has issued credit note but not shown the same in GSTR-1 return under section 34. They have shown the credit note in annual return GSTR-9. Department has issued the demand denying that credit note has not been shown in R1 during the period under questions. What the step the client should take.

 

[Ganeshan Kalyani]

The books of accounts is the main record. You produce the entry in the books of account and also copy of credit note and explain the reason for not furnishing in GSTR-1.

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani Ji. I further add that books of accounts are a statutory records and very much basis of all transactions and entries in GST Returns.

[Padmanathan KV]

GST can be levied only on supply of goods or services or both at the transaction value. Merely because GSTR-1 reflects a higher value, GST cannot be levied on the same. This is the underlying principle.

The actual supply and transaction value has to be proved from your books of accounts as mentioned by experts as above. So kindly reconcile the payment in GSTR-3B with sales register.

[Sudhir Kumar]

But issue is, if the supplier has not amended the outward supply in GSTR-1 and the same is reflected in GSTR-2A of the recipient, the recipient can avail ITC of the reflected amount, but here the outward supply has been shown less by issuing credit note and made payment in GSTR-3B accordingly, however the taxpayer in annual return GSTR-9 shown the less outward supply by taking into account the credit note.

[Shilpi Jain]

What is this credit note issued for? A discount?

if yes, a condition for reducing outward liability is that the recipient should have not taken ITC. Ensure that is satisfied.

Also, whether this CN was reduced in GSTR-3B? and not merely in GSTR-9

AI Summary

Credit note impact on tax liability and input tax credit: ensure GSTR 1 and GSTR 3B reporting and books reconciliation.
Where a credit note was issued but not amended in GSTR 1 and shown only in GSTR 9, the primary response is documentary reconciliation: produce books of account and the credit note, reconcile the sales register with GSTR 3B to show the reduced transaction value and tax paid, and ensure the reduction was reflected in periodic returns (GSTR 3B) rather than only in the annual return. Also confirm that recipients did not avail input tax credit on the original invoice, since unamended GSTR 1 entries may enable recipient ITC claims.