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Bill of Supply whether a tax invoice for issuance of GST debit/credit note?

28 六月 2021

by Vatsal Bhansali Nirav Karia Chaitanya Bhatt

GST as a law has been very dynamic with amendments happening day in and day out as the legislature and the subjects learn from implementing the law to the practical aspects of the business. One of the recent amendments to the law is the amendment to sub-section (4) to Section 16 of the Central Goods & Services Tax Act, 2017 (‘CGST Act’) which was made effective from 1 January 2021. The said amendment results in delinking the date of issuance of the debit note with the date of original / parent invoice against which a GST debit note is issued. This amendment thereby allows the recipient to take credit till September of the following financial year to which the debit note pertains.

A GST debit note is issued as per Section 34(3) of the CSGT Act which permits the issuance of GST debit note against one or more tax invoices in a case where the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply.

The reading of the above provisions indicates that a GST debit note can be issued against one or more ‘tax invoices’. A ‘tax invoice’ as such is issued with respect to a taxable supply which has been defined under Section 2(108) of the CGST Act to mean a ‘supply of goods or services or both which is leviable to tax under this Act.’

However, let us consider a scenario where a person supplied goods at say ‘Nil’ rate of tax by issuing ’Bill of Supply’ (which is a document for making exempted supply) and thereafter realised at later date that the goods supplied earlier were in fact subjected to tax at applicable rate. At this juncture, a question arises as to whether a GST debit note can be issued against a ‘Bill of supply’ also (for the incremental tax amount) or would the same be limited to a ‘GST tax invoice’ only?

It may be noted that a ‘tax invoice’ has been defined at Section 2(66) of the CGST Act, as tax invoice referred to in Section 31 of the Act.

However, the term ‘Bill of Supply’ has not been defined under GST. But the said term has been given recognition under Section 31(3)(c) of the CGST Act to be a document to be issued ‘instead’ of a tax invoice in case of supply of exempted goods or services or both or in case of composite supply.

Considering the above discussion, one could say that ‘tax invoice’ and ‘Bill of Supply’ are independent documents and since Section 34(3) of the Act only prescribes that a GST debit note can be issued against one or more tax invoice, therefore, a GST Debit note cannot be issued against a ‘Bill of Supply’ under GST.

However, attention is invited to Rule 53(1A) of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’), which prescribes the particulars for a valid GST debit note.

The said rule at clause (g) of sub-rule (1A) prescribes that the debit note shall contain the serial number and date of the corresponding tax invoice or, as the case may be, bill of supply. Thus, it appears that as per the Rule 53(1A), a GST debit note is also allowed to be issued with respect to a Bill of Supply.

On reading of the above provisions, a registered person is left confused as to whether a GST debit note can be issued against a ‘Bill of Supply’ under GST or not and whether ‘Tax Invoice’, for the purpose of Section 34 of the CGST Act in effect covers ‘Bill of Supply’ also under its purview or not.

It may further be noted that in the pre-GST regime, an invoice was issued at the time of removal of goods from the factory. Even in a case where the goods were exempted, an invoice alone was issued. Further, under the pre-GST regime a supplementary invoice could be subsequently issued in the event the tax was short discharged or not discharged at all, at the time of removal. Since there was only a single document i.e. invoice alone and it was permitted to issue a supplementary invoice against the original invoice, there existed no confusion. However, since under GST there exist separate documents for supply of exempted and taxable goods or service and the GST provision separately prescribe for issuance of ’GST debit note’ against a tax invoice, there exists an ambiguity.

The CBIC and the legislature should take cognizance of the said ambiguity and clarify the stand as to whether a GST debit note can be issued against a Bill of Supply under GST.

[The first author is an Associate while second and third authors are both Joint Partners in GST Advisory practice at Lakshmikumaran & Sridharan Attorneys, Mumbai]

 

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