RETURN OF DAMAGED MATERIALS under gst

[SUBHASISH SARKAR]

WE are a dairy farm manufacturing into sellin of Milk products,panner etc thru e_commerce platforms and also thru retailers . Some customers return us expired goods or damaged goods thru proper Tax invoice . We do not take the same into inventory but issue a credit note for the full value of the Invoice so received . No GST is charged separately . WHat will be the GST impact ?

Some customers return expired / damaged goods by delivery challan and we give them replacement material under zero tax . Is that a correct procedure under GST 

[Sadanand Bulbule]

1. Return of expired/damaged goods by customer: When a customer returns goods, the supplier (you) can issue a credit note under Section 34 of the CGST Act. The credit note should be linked to the original tax invoice.  This allows you to reduce your GST liability (provided the recipient has not already availed ITC, or if availed, they reverse it).

2. No re-entry of goods into inventory: Since the goods are expired/damaged, you may not take them back into stock.  Still, issuing a credit note is the correct procedure to adjust the original sale.

3. Replacement of goods:  If you supply replacement goods, it is treated as a fresh outward supply. You need to issue a new tax invoice for the replacement goods and charge GST as applicable. You cannot supply replacements under zero tax (unless specifically exempted by law).

 4. Delivery challan use: If the customer returns goods, they may use a delivery challan to send the expired/damaged goods back.  You can accept them without paying GST again, because they are just being returned, not sold.

[Shilpi Jain]

Either you issue a credit note or the customer issues invoice for returned goods. Having both these documents issued is not correct.

The 2nd scenario is fine.

AI Summary

Credit notes for returned goods: supplier must issue linked credit note to adjust GST liability, and replacements are taxable.
Supplier should issue a credit note linked to the original tax invoice to adjust GST on returned expired or damaged goods; recipients who availed input tax credit must reverse it. Replacement goods are treated as a fresh outward supply requiring a new tax invoice and GST unless exempt. A delivery challan may be used to transport returned goods, but it does not substitute for the credit note or invoice requirements, and duplicate documentation for the same return should be avoided.