PHD Chamber Pre-Budget Recommendation on Education sector

Budget expectation on Education sector.

1.     Issues related to Issuance of Credit Notes

As per Section 34 (1) of the CGST Act, 2017, supplier of goods (being the registered person) may

issue a credit note to the recipient of goods under the following scenarios:

·       Where goods supplied are returned by the recipient of goods

·       Where goods or services or both supplied are found to be deficient

As per Section 34(2) of the CGST Act 2017, such credit note is required to be issued by the Supplier within September following the end of the financial year in which such supply was made. Rule 53 of the CGST Rules, 2017 prescribes the particulars required to be mentioned in a Credit note issued by the supplier of goods. Rule 53(h) requires the serial number and the date of corresponding tax invoice / bill of supply to be mentioned in a credit note issued under Section 34 of the CGST Act.


i. Time limit to issue of credit notes by the supplier of goods w.r.t goods returned by the recipient within September of the financial year following the year in which supply was made.

Stationery Industry is seasonal in nature and coincides with the commencement of the academic session between Jan to Jul across various regions. 55%-60% of sales to wholesale dealers are recorded in the Jan-March quarter of the financial year. Sales to end consumers are made subsequently between Mar-August. Sale returns of unsold inventory, if any are identified and initiated thereafter. Considering the geographically dispersed distribution network and season extending upto August of the subsequent financial year, it is difficult to complete the entire exercise of taking returns w.r.t sales made in the preceding financial year within September of the subsequent financial year.

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In view of the above it is recommended to revise the timeline for issuance of Credit Notes towards receipt of sales returns to 12 months from the end of the Financial year or at least till the time filing of Annual Returns for the said Financial Year.

Covid scenario: Government has given relaxations on Return filing dates considering the current pandemic. It is requested, that the last date for issuing Credit notes for FY 2020-21 also be accordingly extended from September 2021 to March 2022.

ii. Goods Return in a State other than the State from which supply was made

Return for outward supplies i.e. GSTR 1 is required to be filed state-wise and the supplier of goods is required to provide the reference of the Original Tax Invoice Number in the Credit Note issued under section 34 of the CGST Act, 2017 read with Rules 53 of the CGST Rules, 2017.

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The current GSTIN system does not allow upload of credit notes containing reference of original invoice issued from a State different from the State in which the return of goods was taken. This results in loss to the supplier of goods as output tax liability cannot be reversed.

Under the following business scenarios, return of goods are taken in a State other than the State from which such supply was made:

·       Non availability of warehouse space in the State from which the sale was made.

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·       To transfer goods to a location where the demand is anticipated thereby avoiding multiple movements.

GST Law was introduced with intention to remove cascading of taxes by a system of seamless tax credits throughout the value chain and across boundaries of States.

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