The Central Board of Indirect Taxes and Customs vide Circular No. 72/46/2018-GST dated October 26, 2018 has provided clarification w.r.t. procedure of return of time expired drugs or medicines. It has clarified that either of following two procedure can be adopted for returning the drugs/ medicines after it’s expiry:
- Return of time expired goods as if it is a fresh supply
- Return of time expired goods by issuing Credit Note
Option 1: Return of time expired goods as if it is a fresh supply
The registered person manufacturer/ trader (other than a composition taxpayer), may, at his option, return the said goods by treating it is as a fresh supply and thereby issue an invoice for the same. The wholesaler or manufacturer, as the case may be, who is the recipient of such return supply, shall be eligible to avail Input Tax Credit (hereinafter referred to as “ITC”) of the tax levied on the said return supply subject to the fulfilment of the conditions specified in Section 16 of the CGST Act.
Where the time expired goods which have been returned by the retailer/wholesaler are destroyed by the manufacturer, he/she is required to reverse the ITC availed on the return supply in terms of the provisions of clause (h) of sub-section (5) of section 17 of the CGST Act. It is pertinent to mention here that the ITC which is required to be reversed in such scenario is the ITC availed on the return supply and not the ITC that is attributable to the manufacture of such time expired goods.
Option 2: Return of time expired goods by issuing Credit Note
The manufacturer or the wholesaler who has supplied the goods to the wholesaler or retailer, as the case may be, has the option to issue a Credit Note in relation to the time expired goods returned by the wholesaler or retailer, as the case may be. In such a scenario, the retailer or wholesaler may return the time expired goods by issuing a delivery challan. In such cases if Credit Note is issued till the time specified u/s 34(2) i.e. by the end of September following the end of financial period, then the recipient need to reverse the ITC taken on such returned medicines and supplier shall reduce it’s output liability.
However, if Credit Note is issued after the time period specified u/s 34(2), then there is no need to declare such Credit Note on GST portal.
Read more at: http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-No-72.pdf;jsessionid=FCD2080E213D1AA43E2E50549571D407