Skip to content

CA Final · Indirect Tax Laws · Miscellaneous Provisions (GST)

Under a contract signed before the appointed day, Kaveri Engineering Pvt Ltd supplied machine parts to Delta Works Ltd, both registered. After the appointed day, the contract price was revised downwards and Kaveri decided to issue a credit note on the 20th day after the price revision. Which statement is correct as per the transitional provisions?

Kaveri may issue the credit note within thirty days of the downward revision, and 20 days qualifies. However, it can reduce its tax liability only if the recipient, Delta Works, has reduced its input tax credit by the corresponding amount, as the proviso requires.

  1. AThe credit note is invalid because it was not issued on the day of revision
  2. BKaveri must issue the credit note within thirty days, and may reduce its tax liability only if Delta has reduced its input tax credit correspondinglyCorrect
  3. CKaveri must issue the credit note within sixty days and the liability reduces automatically
  4. DKaveri may reduce its tax liability whether or not Delta reduces its input tax credit

Explanation

Section 142(2)(b) says a credit note may be issued within thirty days of the downward price revision and is deemed issued for an outward supply under the Act. The proviso allows reduction of tax liability only if the recipient has reduced the corresponding input tax credit. Option 4 ignores this condition.

Did you get it right without looking?

One question tells you little. A timed set on Miscellaneous Provisions (GST) shows your real accuracy, how long you take and where you lose marks.

Practise Miscellaneous Provisions (GST)Free diagnostic mock

More Miscellaneous Provisions (GST) questions