Question 19: 

XYZ Ltd has provided services in the pre-gst regime and has issued service tax invoice on 25.05.2017 amounting Rs. 114,000/- (Rs. 100,000 + 14,000 service tax).Now XYZ Ltd has cancelled that invoice in full by issuance of credit note amounting to Rs. 114,000/- (Rs. 100,000 + 14,000) as on 30.11.2017.

Whether it was right or not to issue credit note by GST credit amounting Rs. 14,000/- ? If yes, can it be shown in GSTR -3B as well as GSTR -1 for the m/o Jan, 2018?

Answer:

According to Section 142(2)(b) credit note shall be  required to be issued in GST with applicable tax relevant to HSN Code under GST  But  supplier issued credit not allowed to reduce their tax liability only when the recipient of of credit note  reduce its   ITC by showing in respective return.

Section 142(2) (b) is reproduced here under:

Section 142: Miscellaneous transitional provisions 

(2) (b) where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act:

Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability.

Thus you are required to issue credit note of value Rs 100000 + applicable GST and shown in GSTR-3B and GSTR-1 of respective month. .(REPLY dt. 21/2/2018)