What will be the treatment (in hands of recipient), of Credit note and Debit note received by the recipient of goods from the supplier of goods, towards the further discount allowed on purchases by him. If such credit note is shown as sales by the recipient of goods in year 17-18, thereby providing output tax to the government and annual returns already filed for 17-18, what to do for its rectification now.

Reply—In case of sale return, seller of goods is required to issue Credit note, supplier of goods is required to show that Credit note in his GSTR-1. Amount of credit in GSTR-2A of buyer will get reduced when supplier issues Credit note in respect of sales return. Your client is buyer of goods, so in the event of purchase return ITC of GSTR-2A will get reduced automatically. No need to issue debit note by purchaser of goods.

As stated in query, buyer has reported the amount of purchase return in table 3.1(a), i.e. outward supplies of GSTR-3B. If buyer has claimed ITC of gross amount then there is no need to do any kind of rectification. Excess ITC would have adjusted from output liability.