As we know that due to covid-19 lockdown, markets and businesses suffer from instability and disruptions due to which several service contracts are being terminated and goods are not being delivered. However, in these cases, the suppliers need not worried, if they have already paid GST on it.
The Central Board of Indirect Taxes and Customs (CBIC) has clarified that, in case GST is paid by the supplier on advances received for a future event, which has got cancelled or the goods supplied by a supplier are returned by the recipient and where tax invoice had been issued, the supplier is required to issue a credit note.
The credit note can be issued in terms of section 34 of the CGST Act and the supplier shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return and there is no need to file a separate refund claim.
If no invoice is generated and the supplier has paid GST on advances received for an event which got cancelled, he is required to issue a refund voucher which can be used to apply for a refund of GST paid on such advances under the category of “Refund of excess payment of tax”.
This is why, the timeline for any compliance due during the period from 20th March to 29th June 2020 has been extended to 30th June 2020. Accordingly, the due date for furnishing of return in FORM GSTR-7 along with the deposit of tax deducted for the said period has also been extended till 30th June 2020 and no interest shall be leviable if tax deducted is deposited by the extended date.