CBIC Withdraws Circular on Evidence Mechanism under Section 15(3)(b)(ii) of CGST Act by Suppliers [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) has officially withdrawn Circular No. 212/6/2024-GST dated 26th June, 2024.

The circular had earlier provided clarifications regarding the mechanism for suppliers to furnish evidence of compliance with the conditions stipulated under Section 15(3)(b)(ii) of the Central Goods and Services Tax (CGST) Act, 2017.

The now-withdrawn circular had laid down procedural guidelines to help suppliers demonstrate compliance with the specific conditions under Section 15(3)(b)(ii), which pertains to post-supply discounts that are agreed upon before or at the time of supply.

As a result, the procedure prescribed by the said circular for providing evidence of compliance with Section 15(3)(b)(ii) is no longer required to be followed by suppliers.

The board said that “ In order to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017, hereby withdraws, circular No. 212/6/2024-GST dated 26th June, 2024. Therefore, the procedure prescribed vide the aforesaid circular for providing evidence of compliance of conditions of Section 15(3)(b)(ii) shall not be required.”

CBIC has also requested that suitable trade notices be issued by field formations to disseminate the contents of this circular among stakeholders.

About the Circular 212/6/2024

Through this circular, the CBIC has clarified that post-supply discounts given by suppliers through credit notes under section 34 of the CGST Act can be excluded from the taxable value only if conditions under section 15(3)(b) are met, particularly the proportionate reversal of Input Tax Credit (ITC) by the recipient.

Since no facility currently exists on the GST portal for suppliers or officers to verify such ITC reversals, suppliers are required to obtain a certificate from a Chartered Accountant/Cost Accountant certifying that the recipient has duly reversed the ITC, including details of invoices, credit notes, and documents evidencing reversal (like DRC-03/returns).

These certificates must carry UDIN and can be verified online. For cases where the tax involved in discounts through credit notes in a financial year does not exceed ₹5 lakh, a self-certificate/undertaking from the recipient is sufficient.

Such certificates/undertakings will be treated as admissible evidence during scrutiny, audits, investigations, or adjudication, even for past periods, to demonstrate compliance with section 15(3)(b)(ii).

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