Question ID : 40532

Credit note for expired goods

A pharmacy dealing in medicines had returned some expired goods to the supplier. The supplier has replaced the goods with fresh stock and issued a credit note towards the goods supplied. The supplier reduced the amount of the credit note from fresh bill. The pharmacy has reduced the purchases to the extent of the credit note.No GST has been charged on the credit note. Whether the pharmacy/medical store is required to pay GST on the credit notes received? If not the reason for the same.

Answer ID : 80332

When The supplier reduced the amount of the credit note from fresh bill. it means no GST is charged on returned goods hence no ITC transferred to medical store so there is no requirement to pay GST on such return.

Answer ID : 80333

When The supplier reduced the amount of the credit note from fresh bill. it means no GST is charged on returned goods hence no ITC transferred to medical store so there is no requirement to pay GST on such return.

Answer ID : 80335

Yes the pharmacy / medical store is required to pay GST on the credit notes received as input tax credit would have been claimed when the original goods had been received by the pharmacy / medical store and upon returning the goods the same has to be paid back. Moreover since the goods returned are expired i.e. it needs to be destroyed by the supplier and when goods are destroyed input tax credit cannot be claimed as per section 16 of the CGST Act, 2017. Hence the supplier also needs to reverse the input tax credit of the rae material used in production of the expired goods returned

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