‘Credit note must show tax rate and tax amount’

We need to provide a special discount as per agreed terms under a B2B transaction. So we are issuing a credit note. Is it necessary to show the GST effect in the credit note? Can we issue a credit note without showing the GST amount?

No. As per Rule 53(i) of the CGST Rules, 2017, rate of tax and the amount of tax must be shown in the credit note.

We are a car dealer in Andhra Pradesh, selling vehicles under lease sales. The lessor is a registered person in Telangana and the lessee is located in Andhra Pradesh. A vehicle is delivered to the lessee’s address and has to be registered in Andhra Pradesh only. Can we raise the IGST invoice in the name of the lessor and can he also claim IGST input credit? My query is under which section can we raise the IGST or CGST / SGST invoice?

From what you say, it appears that the lease contract is between the lessor in Telangana and the lessee in Andhra Pradesh. You are only selling the car to the lessor and on his instructions, delivering the car to the lessee. In this case, you may refer to Section 10(b) of the IGST Act, 2017, which says, “where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person”. In this case, you are the supplier, the lessee is the receiver, the third party is the lessor and thus, the place of supply is Telangana. As per Section 7(1)(a) of the said IGST Act, “subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in two different States, shall be treated as a supply of goods in the course of interState trade or commerce.” Therefore, you have to charge IGST, in accordance with Section 5(1) of the said IGST Act, which says, “subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all interState supplies of goods or services or both.” The lessor can take input tax credit of IGST paid.

What is the provision to reverse the input tax credit (ITC) if we do not pay the supplier within 180 days of invoice? Does this provision apply only to services, or to goods also? What happens if we pay later on?

As per the second and third proviso to Section 16(2) of CGST Act, 2017, ITC reversal applies to goods or services or both, and if you pay later, you can take the ITC.