QUESTION

My client is dealing FMCG products. He is dealer. He has expiry product returned from his parties. He purchased products from his parties in 2017-18, 2018-19. He got product return from his parties now. What is best treatment in GST?

ANSWER

We understood your question as follows:

Your client M/s X  is a dealer sold FMCG product which are returned back to him.

Now he wants to return the same to his supplier.

Since the window for the  issue of debit note /credit note  for the years 2017-18, 2018-19 as mentioned in question is already closed, therefore you should raise invoice for the same. Please note that if you are raising invoice for returning of material, then your supplier will not get ITC because  he is not using the returned material for further supply  but he will destroy the same. So GST will be a cost to him.

Thus instead of raising invoice for the rejected material,  you should return material on challan and raise invoice for the compensation, this will be taxed as service and your supplier will get ITC of the same.

Note: Please correct us if your question is not properly understood so that we may reframe our answer.   (Reply dt.21-06-2020)