Time-Expired Goods Under GST | CBIC Explains Two Methods for Returns

Описание: The Central Board of Indirect Taxes and Customs (CBIC) has clarified procedures for handling returns of time-expired drugs or medicines under GST laws. Two alternative procedures are outlined ¹:
Treating Return as Fresh Supply:
Registered persons can return goods as a fresh outward supply, issuing an invoice with the original value.
Recipients can claim Input Tax Credit (ITC) on tax paid, subject to Section 16 of the CGST Act.
Composition taxpayers issue a bill of supply, paying tax at applicable rates, while unregistered persons use commercial documents without charging tax.

Return by Issuance of Credit Note:
Original suppliers issue a credit note under Section 34(1) of the CGST Act.
Recipients return goods via delivery challan.
Tax liability can be adjusted if the credit note is issued within the time limit (before September of the following financial year) and the recipient hasn't availed or has reversed ITC.

Key Considerations

Destruction of goods by manufacturers requires reversing ITC availed on return supply, not original manufacture.
Procedures apply to other return scenarios, such as defective or unsold goods.
Field formations must issue trade notices to disseminate this clarification and report implementation difficulties to the Board.

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