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CA Final · Indirect Tax Laws · Tax Invoice, Credit and Debit Notes

Sharma Traders, a registered supplier in Pune, sold goods to Kavya Enterprises (registered) under three separate tax invoices in July 2024, all in the financial year 2024-25. Some goods were later found deficient. Sharma Traders wants to issue a single document that adjusts all three invoices. Which statement is correct as per section 34 of the CGST Act?

A single credit note can cover several tax invoices, because section 34 permits one or more credit notes for supplies made in a financial year, and deficiency of goods or services is a valid ground. The supplier need not issue a separate credit note for each invoice.

  1. AA separate credit note must be issued for each tax invoice; one credit note cannot cover several invoices
  2. BOne or more credit notes may be issued for supplies made in a financial year, so one credit note may cover several invoices of that yearCorrect
  3. CA credit note can be issued only if the goods are physically returned, not for deficiency
  4. DA credit note can be issued only to an unregistered recipient

Explanation

Section 34(1) allows the supplier to issue one or more credit notes for supplies made in a financial year, where goods or services are found deficient. Hence one credit note can refer to several invoices of the same year. The rule in Rule 53(1A)(g) also contemplates serial numbers and dates of corresponding invoices in the plural. Option A is wrong because the plural wording was introduced to allow consolidation.

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