There are different practices being followed for return of  drugs or medicines time expired or return for other reasons and various representation has been made by the industry, to ensure uniformity in practice the CBIC has issued a circular no. 72/46/2018-GST dated 26 October 2018.

Key points and detail procedure, documentation are summarised below.

Key points:

1. The procedure mentioned in circular is applicable to the return of goods for any reason including time expired.

2. Registered supplier of returned goods to either treat it as fresh supply and charge GST or

Recipient (original supplier) to issue credit note with GST within 6months following end of the financial year supplier to reduce ITC and

if return is after said 6 months Recipient to issue credit note without GST, no need upload on GST portal;

3. If supplier of returned goods is unregistered person, he should issue any commercial document no other formalities are to be followed by recipient

4. ITC to be reversed by the person who destroys the goods.

Detail procedure and documentation:

Return of goods on the basis of Tax Invoice by the recipient
Sr. No. Nature of Transaction Supplier of goods Documents Recipient of goods
1 Return of goods expired or otherwise from customers who is registered under GST not being a composition dealer to wholesaler/ wholesaler to Manufacturer Supplier will treat transaction as a fresh supply and charge GST on the invoice Issue Tax invoice Recipient to avail ITC.
If said goods are destroyed by the recipient reverse the ITC availed on such returned goods
2 Return of expired goods from customers who is registered as a composition dealer to wholesaler/ wholesaler to Manufacturer Supplier will treat transaction as a fresh supply and pay GST as applicable. Issue Bill of Supply No ITC
3 Return of expired goods from customers who is not registered under GST to wholesaler/ wholesaler to Manufacturer Supplier will treat transaction as sales return Issue of any commercial document No ITC
4 Goods returned by the retailer/ wholesaler are destroyed by Manufacturer. Supplier return the goods with charging GST. Tax invoice Reverse the credit availed on the basis of invoice raised by supplier under section 17(5)(h)
Return of goods on the basis of credit note issued by original Supplier
Sr. No. Nature of Transaction Supplier of goods Documents Recipient of goods
1 The expired goods are returned by retailer/ Wholesaler on the basis of credit note issued by Wholesaler/ manufacturer within 6 months from the end of financial year in which supply is made. Supplier has either not availed the ITC or if  availed  has reversed  the ITC so availed. The supplier of goods i.e. retailer/ Wholesaler will remove goods on the basis of delivery challan. 1. The recipient of goods  i.e. Wholesaler/ manufacturer will issue credit note and report the same in its GSTR 1 and reduce the liability to the extent of tax amount under credit note.
2.The credit note is to be issued before 30th September subsequent to financial year in which original supply was made.
2 The expired goods are returned by retailer/ Wholesaler on the basis of credit note issued by Wholesaler/ manufacturer after 6 months from the end of financial year in which supply is made. In this case goods are to be returned on or after 1st October subsequent to financial year in which original supply was made, no need to reverse the ITC The supplier of goods i.e. retailer/ Wholesaler will remove goods on the basis of delivery challan. The recipient of goods  i.e. Wholesaler/ manufacturer will issue credit note without GST and will not declaring the same on GSTN.

 

 

 

 

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