Section 34 provides for reason of issue of CN and DN, its time limit and contents.

Credit notes (CN) may be issued by supplier to decrease value of supply or tax thereon.

Debit notes (DN) may be issued by supplier to increase value of supply or tax thereon.

Section 34(1)

[1][Where one or more tax invoices have] been issued for supply of any goods or services and

taxable value or tax charged exceeds taxable value or tax payable, or

where the goods supplied are returned by the recipient, or

where goods or services are found to be deficient,

RP, who has supplied such goods or services or both

may issue to the recipient [2][one or more CN for supplies made in a FY] containing such particulars as may be prescribed.

CN may be issued in following cases

taxable value or tax charged exceeds taxable value or tax payable, or

where goods are returned by the recipient, or

where goods or services are found to be deficient,

Question & Answer

Circular No. 92/11/2019 - GST dated 07-03-2019

D(i)

These are the discounts which are not known at the time of supply or are offered after the supply is already over. For example, M/s A supplies 10000 packets of biscuits to M/s B at Rs. 10/- per packet. Afterwards M/s A re-values it at Rs. 9/- per packet. Subsequently, M/s A issues credit note to M/s B for Rs. 1/- per packet.

D(ii)

Provision of Section 34(1) are given

D(iii)

Whether CN (s) u/s 34(1) can be issued in such cases even if the conditions laid down in section 15(3)(b) are not satisfied.

It is hereby clarified that financial / commercial CN(s) can be issued by the supplier even if the conditions mentioned in section 15(3)(b) are not satisfied.

D(iv)

It is further clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in section 15(3)(b) are not satisfied.

D(v)

In other words, value of supply shall not include any discount by way of issuance of CN(s) as explained above in para 2(D)(iii) or by any other means, except in cases where the provisions contained in section 15(3)(b) are satisfied.

D(vi)

There is no impact on availability or otherwise of ITC in the hands of supplier in this case.

Section 34(2)

RP shall declare the details of CN in the return for the month during which such CN has been issued but not later than

[3][30th Nov] following the end of the FY in which such supply was made, or

date of furnishing of the relevant annual return,

whichever is earlier, and

the tax liability shall be adjusted in such manner as may be prescribed:

CN must be declared in GSTR-1 on or before

30^th Nov following the end of the FY in which such supply was made, or

date of furnishing of the relevant annual return,

Proviso to Section 34(2)

no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

Section 34(3)

[4][Where one or more tax invoices have] been issued for supply of any goods or services or both and

the taxable value or tax charged is found to be less than the taxable value or tax payable,

RP, who has supplied such goods or services or both,

shall issue to the recipient [5][one or more DN for supplies made in a FY]

containing such particulars as may be prescribed.

DN may be issued if taxable value or tax to be increased for any reson.

Section 34(4)

RP who issues a DN shall declare the details of such DN in the return for the month during which such DN has been issued and

the tax liability shall be adjusted in such manner as may be prescribed.

Explanation – For this Act, the expression “debit note” shall include a supplementary invoice.

^[6][Rule 53(1A)

A CN or DN  shall contain the following particulars, namely:–

(a) name, address and GSTIN of the supplier;

(b) nature of the document;

(c) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters-hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(d) date of issue of the document;

(e) name, address and GSTIN or UIN, if registered, of the recipient;

(f) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;

(g) serial number(s) and date(s) of the corresponding tax invoice(s) or, as the case may be, bill(s) of supply;

(h) value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient; and

(i) signature or digital signature of the supplier or his authorised representative.]

Rule 53(3)

Any invoice/DN issued in pursuance of any tax payable u/s section 74 or 129 or 130 shall prominently contain the words “INPUT TAX CREDIT NOT ADMISSIBLE”.

Question & Answer