QUESTION

One of my clients issued Tax Invoice under GST after charging IGST in respect high sea sales to a registered person in India in November 2019. He filed GSTR-1 also for the month of November 2019 taking the liability for payment of IGST. In fact it was a non-GST supply not attracting IGST and a Tax Invoice was not required to be issued as the movement of goods was not from his factory. I opine that a commercial invoice should have been issued. In order to correct the mistake, in my opinion my client should mention the value of this transaction against NON-GST supply in his GSTR-3B Return for the month of November 2019 and then amend the invoice in question in his GSTR-1 for the month of December 2019 so that his GST liability for the month of November gets reduced to that extent.

ANSWER

Facts of the case:
Tax invoice has been issued for High Seas sale and also reported in GSTR-1.

 Law Applicable:
SCHEDULE III OF CGST ACT
8. (a) Supply of warehoused goods to any person before clearance for home consumption;

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.

Interpretation:
High seas sale (i.e. by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption) is considered as non GST supply as per Schedule III, thus you are required to issue Bill of supply in case of High Seas sale instead of tax invoice. Therefore you are required to cancel tax invoice as GST will not be applicable on such transaction.

To cancel the tax invoice you are required to issue credit note against such tax invoice and report the same in GSTR-1 of succeeding month to nullify the impact of tax invoice reported earlier. Raise Bill of supply for High Seas sale (non GST transaction). 

Conclusion:Instead of amending the tax invoice in GSTR-1, Issue credit note against tax invoice and issue Bill of supply. Report such transaction as Non GST Supply in GSTR-3B