Credit Note Rejected by Recipient in IMS – Tax Paid in GSTR-3B – Remedy Available?

[Hemlata Agarwal]

We had issued a genuine credit note to the recipient. However, the recipient has rejected the credit note in IMS. Due to this rejection, the value got added back to our output tax liability in GSTR-3B, and we have already discharged the tax liability accordingly.

In this situation, kindly guide us on:

• What remedies/options are available to the supplier?
• Any legal provision or CBIC clarification applicable in such cases?

Expert guidance will be highly appreciated.

[Sadanand Bulbule]

To remedy this, you have to re-furnish the identical credit note through GSTR-1A or the Amendment Table (9C) of your next GSTR-1, ensuring the recipient "Accepts" it this time to neutralize the added tax liability.

Under Section 34(2) and recent IMS advisories, this re-reporting is the standard procedure to reclaim the tax benefit when a recipient erroneously rejects a valid commercial adjustment.

 

[Shilpi Jain]

Any time a credit note is issued and put in returns do communicate with customer before hand to ensure it gets accepted.

Even in case the customer rejected you could have added it again in GSTR-1A and avoided payment of GST in that month.

Pls see the advisory issued by GSTN in this regard.

In subsequent month you can add the same credit note in the amendment table in GSTR-1 and this time pls inform customer before hand.

AI Summary

Credit note rejected in IMS; re-file via GSTR-1A or amendment to restore tax credit upon recipient acceptance.
When a supplier's valid credit note is rejected in IMS and the supplier has paid the added output tax in GSTR 3B, the remedy is to re-furnish the identical credit note through GSTR 1A or the Amendment Table (9C) of the next GSTR 1 and secure recipient acceptance so the added tax liability is neutralised, consistent with IMS advisories and Section 34(2).