GST: Allow Due ‘Credit’ of this ‘Note’

Abstract

It is normal trade practice to refund the money in case of dispute in a transaction entered into by two parties and raise the credit note as a documentary requirement. Sometimes the settlement may take substantial time and even years. By that time, the GST would already have been discharged by the supplier and ITC must have been claimed by the recipient on the same. However, when the amount is refunded upon settlement of dispute, GST law may not allow to adjust the liability paid earlier by simple reason of not raising credit note within time limit prescribed under the law. This may cause hardship to the payers as tax component returned becomes cost to them. This may be avoided by bringing about a small change in GST law and making it in line with erstwhile Service tax regime. Let’s explore further.