GST – Started By: – Madhavan iyengar – Dated:- 6-1-2019 Last Replied Date:- 7-1-2019 – A Company based X in India has imported services from its related party B in Germany, X has discharged IGST on RCM basis based on invoice of ₹ 100000/- ( converted value) issued by B and claimed ITC of say ₹ 18000Issue: After 4 months B issues a credit note to A reducing the earlier invoice amount.by rs. 50000/- Is A required to reverse the ITC of IGST taken earlier in proportion to reduction in value of the invoice – ie is IGST reversal of rs. 9000 to be done by A If no then reasons for same – Reply By Spudarjunan S – The Reply = Dear Sir, No Need to reverse the same. Reasons for the same is provided below:- The recipient of a supply has to reverse his Input tax credit if his supplier issues him a TAX CREDIT NOTE under section 34 of CGST Act, 2017. Credit notes can be a Tax Credit note or a Financial Credit note, in case of financial credit note there is no requirement of reversal of in
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appens in case of goods if it is a local sale and financial credit note issued by supplier and the differential amount is booked as income ??? is gst to be discharged. – Reply By Spudarjunan S – The Reply = In case of financial credit notes in domestic supplies, the query of non-payment of consideration arises. However the same financial credit note can be treated as payment of consideration through book adjustments. so no need to reverse the ITC in relation to such financial credit note. There are CESTATdecisions in Service Tax regime supporting the same – Reply By Madhavan iyengar – The Reply = thanks in case of services there is a challenge if we look at sec 16 which talks about conditions for taking credit- if credit note is issued for deficient supply of services for a certain amount then to that extent can it be inferred that some part of services are not received hence reversal will trigger iam only referring to cases in which credit note is given with out gst impact but then al
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ntation that the financial credit note has been issued for discount for taking this stand. If the credit note has to been issued for doing anything or achieving anything which is been agreed between the supplier and the recipient the department may take a stand that such credit note is consideration for supply of services as per Schedule II – Sl.no.5(e) of CGST Act, 2017. – Reply By Madhavan iyengar – The Reply = thanks but pls see below points in light of section 16 for receipt of goods/services in case of services there is a challenge if we look at sec 16 which talks about conditions for taking credit- if credit note is issued for deficient supply of services for a certain amount then to that extent can it be inferred that some part of services are not received hence reversal will trigger i am only referring to cases in which credit note is given with out gst impact but then also can reversal get trigerred the above needs to be looked into for both domestic / rcm as sec 16 is the bas
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