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.

- Deepak Kumar

Story so far

As the GST has turned ‘3’ this July and is still taking baby steps to move forward with CBIC/finance ministry closely holding its hand in guiding the way forward, it can also not be ignored that it has come a long way since its implementation in July 2017.

The kind of response shown by various stakeholders at helm in resolving issues around the implementation and evolvement of GST is unprecedented and commendable. From taking decisions by GST council, whether meeting physically or virtually through video conferences, to communicating the decisions swiftly by releasing press notes and issuing notifications thereafter, to addressing technical glitches, the GST implementation has been quite a success given the size of Indian economy.

It is also pertinent to note that wherever the assessees faced difficulty in complying with the provisions of GST, the CBIC have come up with instructions guiding its field staff not to harass honest taxpayers and also extending due dates of various compliance deadlines from time to time. The prompt action taken by the authorities is appreciable.

However, since the GST law is still evolving and inching towards maturity, there are certain areas where it still needs improvement to make it fair and easy.

One such area where the law does not play fair with the taxpayers and favors the revenue is issuance of credit notes under GST law. Let’s discuss the issue in detail in subsequent paragraphs.

Credit notes but without credit