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+--- Thread: Credit and Debit Notes and Destruction of Goods (/thread-credit-and-debit-notes-and-destruction-of-goods)
Credit and Debit Notes and Destruction of Goods - Muhammad Ajaz Paracha - 03-05-2007
The provisions of Chapter III of Sales Tax Rules,2006 is as follows
CREDIT AND DEBIT NOTE AND DESTRUCTION OF GOODS
19. Application.âThe provisions of this chapter apply where a registered
person has issued a tax invoice in respect of a supply made by him and as a result of
any of the events specified in section 9 of the Sales Tax Act, 1990, the amount shown in
the tax invoice or the return needs to be modified.
20. Cancellation or return of supply.â(1) Where a registered person has
made a supply, and such supply or part thereof is cancelled or returned, the buyer or
the recipient shall issue a Debit Note (in duplicate) in respect of such supply or part
thereof, indicating the quantity being returned or the supply of which has been
cancelled, its value determined on the basis of the value of supply as shown in the tax
invoice issued by the supplier and the amount of related sales tax paid thereon, as well
as the following, namely--
(i) Name and registration number of the recipient;
(ii) name and registration number of the supplier;
(iii) number and date of the original sales tax invoice;
(iv) the reason of issuance of the Debit Note; and
(v) signature and seal of the authorized person issuing the note.
(2) The original copy of the debit note shall be sent to the buyer and the
duplicate copy shall be retained for record.
(3) In the case of cancellation of supplies made to, or return of goods by, an
unregistered person, the supplier shall issue a credit note providing the same particulars
as are specified in sub-rule (1) and keep a copy for record.
21. Change in Value of Supply or amount of sales tax.-(1) Where for any
valid reason the value of supply or the amount of sales tax mentioned in the invoice
issued has increased, the supplier shall issue a Debit Note (in duplicate), with the
following particulars, namely--
(i) name and registration number of the supplier;
(ii) name and registration number of the recipient;
(iii) number and date of the original sales tax invoice;
(iv) the original value and sales tax as in original invoice;
(v) the revised value and sales tax;
(vi) the difference of value and sales tax adjustable;
(vii) the reason for revision of value; and
(viii) signature and seal of the authorized person issuing the note.
(2) Where, for any valid reason, the value of supply or the amount of sales tax
mentioned in the invoice issued has decreased, the supplier shall issue a Credit Note
(in duplicate), with the same particulars as specified in sub-rule (1).
(3) The original copy of the note as referred to in sub-rules (1) and (2), shall be
sent to the recipient and the duplicate shall be retained for record. In respect of a case
falling under sub-rule (2), the recipient shall issue a Debit Note with reference to the
Credit Note issued by the suppliers as an acknowledgment of the receipt of the same
providing therein the same details as in the corresponding Credit Note.
22. Adjustment of input and output tax.â(1) The buyer shall not be entitled
to claim input tax in respect of the supply which has been cancelled or returned to the
supplier or in respect of which the amount of tax was reduced.
(2) Where the buyer has already claimed input tax credit in respect of such
supplies, he shall reduce or increase the amount of input tax by the corresponding
amount as mentioned in the Debit Note or Credit Note, as the case may be, in the return
for the period in which the respective note was issued.
(3) Where the supplier has already accounted for the output tax in the sales tax
return for the supplies against which Debit Note was issued subsequently, he may
increase or reduce the amount of output tax by the corresponding amount as mentioned
in the Debit Note, in the return for the period in which the respective note was issued
Provided that in case of return of supplies by an unregistered person, the
adjustment as aforesaid can be made against the Credit Note issued by the supplier.
(4) The adjustments as hereinbefore noted which lead to reduction in output tax
or increase in output tax can only be made if the corresponding Debit Note or Credit
Note is issued within one hundred and eighty days of the relevant supply
Provided that the Collector may, at the request of the supplier, in specific cases,
by giving reasons in writing, extend the period of one hundred and eighty days by a
further one hundred and eighty days.
(5) Where the goods relating to a returned or cancelled supply are subsequently
supplied to the original buyer or some other person with or without carrying out any
repairs, the supplier shall charge sales tax thereon in the normal manner and account
for it in his return for the period in which these goods were supplied.
23. Destruction of goods.âWhere any goods are returned by the buyer on the
ground that the same are unfit for consumption and are required to be destroyed by the
supplier, the goods shall be destroyed after obtaining permission from the Collector of
Sales Tax having jurisdiction, and under the supervision of an officer of Sales Tax not
below the rank of an Assistant Collector as may be deputed by the Collector for the
purpose.
[b]Kindly let me know what should a registered person do if time period of 180 days lapses and Collector also not extends any further period ? On the other hand accounting treatment on the part of buyer is to reverse his liability and cost simultaneously.