Date: 10/05/2022

To,
Sri Narendra modi
Prime minister office
South Block,Raisina hill ut.u9 -04) m-rthazi
PRIME MINISTER'S OFFICE
New Delhi- 110011
17 MAY 1077
From, 1-111-PT /OAK SECTION
Dheeraj 11 R
Sri Raghavendra Medicals
Azad road, Thirthahalli-577432
Mob: 9844926434

Subject : Regarding the Return of generic/ Pcd's medicines, when it is expired,

non moving, damaged or banned drugs is not been settled by its manufacturers or
company towards retailers and wholesalers, effects on nature, GST loss and drug
abuse.

Greetings sir,
Above subject Regarding the Return of generic/ Pcd's medicines, when it is
expired,non moving, damaged or banned drugs is not been settled by its
manufacturers or company, according to MOU agreed between AICOD and
IDMA and GST circulars 72/46/2018-GST, every company or manufacturers
should settle the time exceeded drugs with credit notes or by replacing the item
along with its CST amount and they are doing these settlements in ethical
products, but when it's comes to same those branded generics and PCD's they are
not ready to take it back . Why?
As a result so many drugs are dumped to The nature or drug abuse, stockiest will
face huge losses, apart form pricing and branding both ethical and branded
generics and PCD's are all drugs only why this discrimination. It is the duty and
responsibility of each and every company or manufacturers that they have to take
back drugs produced by them when it is expired, non moving, banned and
damaged and proper settlements has to be done. These manufacturers are

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producing N number of drugs and will dump into market to sell and make huge
profits when it comes to settle time exceeded drugs they won't take back these
drugs.
Drawbacks of these issues are
1.Dumping of time exceeding goods to the nature Like ethical products when
these branded generics and PCD goods are not taken back, the stockiest or the
retailer can't sell those time exceeding drugs, they have forced to throw it to the
nature which will lead to drug contamination of nature. Unsold stock of branded
drugs promoted ethically by pharma companies through their medical
representatives to clinics and doctors will be taken back for reimbursement. This
will then be destroyed by the manufacturers at their facility. However, if the drugs
are generic, these are not promoted ethically by companies and medical
representatives will request doctors to prescribe them to consumer. These are sold
at lesser price; also if remained unsold, no reimbursement is given to the
representatives. It is not done in case of branded generics or Pcd's
2. PDC manufacturers won't keep its drug supply chain tracks, these PCD
manufacturers won't keep any records, they will manufacture and release it directly
to the market as a result drugs abuse and drug addiction cases will increase.
3. Misuse of drugs will increase, when the goods are not settled it will force retailer
or stockiest to sell it to unethical way to avoid huge losses.
Serious attention is needed on this issue, every pharma production companies are
making huge profits because as we all know we are paying huge amount to a bit of
chemical powder , still companies are not ready to take back it's time exceeding
drugs. It is the request that like ethical drugs, for Branded generics and PCD's will
be taken back for reimbursement. This will then be destroyed by the manufacturers
at their facility otherwise to avoid huge losses they will dump into nature. It is a
request that either it is better to declare these branded generics and PCD's like
Normal drugs under drugs and cosmetic act and should process time exceeding
drugs like ethical drugs if not please keep it out from drugs and cosmetic act and
the purview of GST. Please make and set some rules and regulations for all these
branded generics and PCD's when it expires.
Documents attached:

1.MOU agreed between AICOD and IDMA

2. GST circulars 72/46/2018-GST.

Thanking you

Dheeraj iI R

Copy to:
1. Office of the goods and service tax council, Delhi
2. CDSCO, Delhi
3. Central pollution control board, Delhi
4. Narcotics control bureau, Delhi
5. Director GST council, Delhi
6. National health authority, Delhi
7. ' NitlAayog, Delhi
8. NPPA, Delhi
-- Ett,TO. 1915

All INDIA ORGANISATION OF CHEMISTS & DRUGGISTS

President :
Hon. Gen. Secretary :
DILIP A. MEHTA
01o. M. S. C. D. KAMAL KUMASI MUKIM
110/111. 0odar.Ma fish Maiket. -Shah House". P-34,
Ground Floor. Senapell Sepal Mew, India Exchange Place,
Dadar (W. R ), Mumbal.400 028. Calculta-700 001.
Tel, : 022-431 00 43. 431 00 17 Tel.: 033-228 38 01 / 225 47 13
Pax : 022-431 01 14 Fax : 033-22647 13
mscrIciebom 5. vsnl. net. In : ornsushilecal. vsnl. net. In

April 1, 1999

REP: DAIV1/M/MCMIOCD/568/99

CHEMISTS & DRUGGISTS, THIRTHAHALLI

C/o. NIURTILY &
Azad Road,
Thirthahalli — 577 432
Shimoga.Dist.
KARNATAKA

Dear Sir,

We are in receipt of your letter dated 26th March i999 and noted the contents therein.

As per your request please find enclosed herewith the copy of latest MOO agreed between AIOCD
and IDMA. The same is for your reference and record

Thanking:you

. Yours faithfully,
for THE AIOC1)

(DILIP. A. MEHTA)
PRESIDENT
 Memory n !urn
n erstandin
behveen !DMA OPPI and AI D

I. IASsa
n

AlOCD. agrees to implement

the PIS System at Slate level only
throughout India, except the
State of Maharashtra where the PIS System
will be implemented at State level in
a phased manner as soon as
possible.

2. Revised Ex ir Norms:

(a)
If a product is• returned to the respective manufacturer through the

stockists before two months• of the date of expiry or within

six months
atter the date of expiry, it will be
eligible for 100% replacement on MRP
to MRP basis (the price
printed,on the container/pack and no deductions
thereof). Regarding issuance of credit notes, it was
discussed that in case

a company cannot issue MRP to MRP replacement, then credit note

would be in order. Such credit notes will be issued at the applicable price

(respective purchase price of gistributors/Stockists/Retailers), plus.

Egcise and Sales Tax.

liltistration

If a product is getting expired on P' January it can be returned to the

company for 100% replacement on MRP basis on or after In November,

i.e. before 2 months of the expiry or after expiry on 1st January it can be
returned to the company by 30°
i June i.c within 6 months of the dale of
expiry for 100% replacement.
 (7

:3:

3. Distribution Norms:

It was resolved that there will not be any monopoly distribution setup in a

district and wherever there is only one stockist of a particular company in

a revenue district, the second stockist can be appointed in the district for

the particular. manufacturer and'there will not be any restrictions by the

local associations on the manufacturers. However, the second stockist in

a district should be a bonafide member of the association. As soon as the

second stockist appointment letter is issued in favour of the stockist the

matter should be reported by the stockist member to the local association

for onward information to all the members.

In order to have a balanced distribution system covering the entire nook

and comer of the country for the mutual benefit of the Trade, Industry and

the Consumers, it was decided by the working group to decide policy

guidelines in the matter of appointment of additional stockists - and

termination of the stockists. For this purpose the Industry and Trade

representatives will separately formulate their guidelines on the subject

matter which will be discussed and decided in fill= Trade and Industry

Joint meetings

• Direct Supplies:

All supplies to retail outlets and other establishments/counters selling

medicines to consumers will be made through authorised stockists only.

Manufacturers may make direct supplies where required, to

government/quasi-government/public sector/industrial institutions buying

for the purpose of free distribution or for own consumption.

 (b)
Settlement of claims is to be made by giving free replacements of fast

selling items having an MRP equivalent to the total MRP goods returned

by the Stockists.
, •

(e) No . purchase details required

for the stockists returning the near

expiry/expired products to the company for replacements

as per the above
stipulations.
Certification by field staff . should not be mandatory

whenever claims are accompanied by expired/near expiry goods (saleable

packs). However, manufacturers have the right to verify the genuineness

of t h e expired/near expiry products.

(d)
-All .such claims of near expiry/expired products lodged, with the

companies have to be settled in case of local stockists based in depot

toWit within four months of the receipt of

near expiry/expired stocks by

the company and in case of outstation stockists within four months of the

receipt.of LIZ by the company. Failure on the par( of the company to

settle the claims subniitted with them within four months as per above

stipulations shall entail a simple interest to be paid by the company to the

stockists at the rate of 18 (eighteen) percent p.a. The aforesaid interest

rate may be reviewed every 12 months by the Trade and Industry. The

interest will commence from the day the four months period of settling the

claim is over (only overdue period). For Breakage/Damage Claims also

.
•this claim settlement period and interest rate shall apply.

(CO The above terms will be effective from 1.3.1999.

 :4:

5. Spurious Drugs:

It :was decided that in order to put a stop to thee clandestine activities,

the following methods should be adopted:

(a) The chemists should purchase the medicines only from authorised sources

i.e. the authorised stockists or the authorised wholesalers etc. I Jere the

Trade and Industry should co-operate in eliminating such parties who are

found to b,2 dealing in spurious drugs.

(b) Suitable representations to (lie Government or India as well as Local State

Governments should be made by the Trade and Industry in the thatter.of

spurious drugs.

(e) If a product of the inanufactiger is sold in the market much below the •

official rates then the issue should be taken up by the Trade with the

particular manufacturer so as to ascertain the genuineness of the product.

Mn panic should be created in the matter of spurious drugs, rather the

matter should bn dean with wisely by the Trade and luduslry .:)y keeping

theMselveS vigilant.

6. The Full fledged Trade and Industry Association Meeting will take place

for further discussions on the remaining points of the Trade and ludissoy.

„:•(...i
ik Lj.,L__. maraeucsn-
President ItPresident President c
retaryr
IBMA OPPI ' 'AIOCI) PUOCD
Dv. acta. kftwat Knit fl'en0- KtmisroXf..044- Dile? A. MeWii . K• X. m 4-4p:kn,
Prosic12,4-- I DMA Reizsi.JR,4- OPP I 1?-, csicl.2.4_ Ai Do Girrb, . Sae, . hi atD
•
MDMBAI -Dated: a 97
 14.4.1ATION
.
traid MARKET
ran re ral% •

MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
titzT 41*.crIr.tt 311,% m y, ;41 tot re! W4W, r eT, 441c1t-560001
OFFICE OF THE PRINCIPAL CHIEF COMMISSIONER OF CENTRAL TAX
ICARNATAKA ZONE, P.B.No. 5400, C.R. BUILDING,
QUEENS ROAD, BENGALURU-560001

C.No.[V/l 6/245/2018 GST-IV-CC.C.Ex. (BZ) -3 g

P.:mill/Dated:14.11.2018

To
Slut. Dheeraj I-1.R,
Raghavendra Medicals
Azad Road, Thirthahalli,
Shivamogga,
Karnataka-577432

Gcntlemah,

1=01711 Sub:- Clarification-Settlement of Banned /Expired /Returned /Damaged /

Non Moving Drugs from retailer to wholesaler, GST Amount
Settlement, Issuing of Credit Note- Reg.
*

Pldase refer to your letter addressed to GST Council, dated 18.09.2018 on the above subject.

In this regard, it is to inform that the issues raised by you in your representation regarding
return of time exceed medicines has been clarified by the Board vide Circular No.72/46.12018-GST
dated 26.10.2018 (copy enclosed). Hence, you are requested to follow the procedures laid down in
the said Circular.

This is for your kind information please.

Yours sincerely,

ayathri Menon)
/Assistant Commissioner (PCCO)
End: - As above
 Circular No. 72/46/2018-GST

F. No. CBECJ20/16/04/2018-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, Dated the 26th October, 2018

To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissiogers/
Commissioners of Central Tax (All)
The Principal Directors General/Directors General (All)

Madam/Sir,

Subject: Circular to clarify the procedure in respect of return of time expired drugs or
medicines - Reg.

Various representations have been received seeking clarification on the procedure to

be followed in respect of return of time expired drugs or medicines under the GST laws. The
issues raised in the said representations have been examined and to ensure uniformity in the
implementation of the law across the field formations, the Board, in exercise of its powers
conferred under section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter
referred to as the "CGST Act") hereby clarifies the issue in succeeding paragraphs.
2. The common trade practice in the pharmaceutical sector is that the drugs or medicines
(hereinafter referred to as "goods") are sold by the manufacturer to the wholesaler and by the
wholesaler to the retailer on the basis of an invoicelbill of supply as case may be. It is
significant to mention here that such goods have a defined life term which is nonnally
referred to as the date of expiry•. Such goods which have crossed their date of expiry are
colloquially referred to as time expired goods and are returned back to the manufacturer, on
account of expiry, through the supply chain.

3. It is clarified that the retailer/ wholesaler can follow either of the below mentioned
procedures for the return of the time expired goods:

Page 1 of 4
 Circular No. 72/46/2018-CST

(A) Return of time expired goods to be treated as fresh supply:

a) In case the person returning the time expired goods is a registered person (other than a
composition taxpayer), he may, at his option, return the said goods by treating it is as a fresh
supply and thereby issuing an invoice for the same (hereinafter referred to as the, "return
supply"). The value of the said goods as shown in the invoice on the basis of which the goods
were supplied earlier may be taken as the value of such return supply. The wholesaler or
manufacturer, as the case may be, who is the recipient of such return supply, shall be eligible
to avail Input Tax Credit (hereinafter referred to as "ITC") of the tax levied on the said return
supply subject to the fulfilment of the conditions specified in Section 16 of the COST Act.
b) In case the person returning the time expired goods is a composition taxpayer, he may
return the said goods by issuing a bill of supply and pay tax at the rate applicable to a
composition taxpayer. in this scenario there will not be any availability of ITC to the
recipient of return supply.
c) In case the person returning the time expired goods is an unregistered person, he may
return the said goods by issuing any commercial document without charging any tax on the
same.
d) Where the time expired goods which have been returned by the retailer/wholesaler are
destroyed by the manufacturer, helshe is required to reverse the ITC availed on the return
supply in terms of the provisions of clause (h) of sub-section (5) of section 17 of the CGST
Act. It is pertinent to mention here that the ITC which is required to be reversed in such
scenario is the ITC availed on the return supply and not the ITC that is attributable to the
manufacture of such time expired goods.

Illustration: Supposedly, manufacturer has availed ITC of Rs. 10/- at the time of manufacture

of medicines valued at Rs. 1004. At the time of return of such medicine on the account of

expiry, the ITC available to the manufacturer on the basis of fresh invoice issued by

wholesaler is Rs. I 5/-. So, when the time expired goods are destroyed by the manufacturer he
would be required to reverse ITC of Rs. 15/- and not of Rs. 104.

(B) Return of time expired goods by issuing Credit Note:

a) As per sub-section (1) of Section 34 of the CGST Act the supplier can issue a credit note
where the goods are returned back by the recipient Thus, the manufacturer or the wholesaler
who has supplied the goods to the wholesaler or retailer, as the case may be, has the option to
issue a credit note in relation to the time expired goods returned by the wholesaler or retailer,

Page 2 of 4
 Circular No. 72/46/2018-GST

as the case may be. In such a scenario, the retailer or wholesaler may return the time expired
goods by issuing a delivery challan. It may be noted that there is no time limit for the
issuance of a credit note in the law except with regard to the adjustment of the tax liability in
case of the credit notes issued prior to the month of September following the end of the
financial year and those issued after it.

b) It may further be noted that if the credit note is issued within the time limit specified in
sub-section (2) of section 34 of the COST Act, the tax liability may be adjusted by the
supplier, subject to the condition that the person returning the time expired goods has either
not availed the ITC or if availed has reversed the ITC so availed against the goods being
returned.

c) However, if the time limit specified in sub-section (2) of section 34 of the CGST Act has
:lapsed, a credit note may still be issued by the supplier for such return of goods but the tax
liability cannot be adjusted by him in his hands. It may farther be noted that in case time
expired goods are returned beyond the time period specified in the sub-section (2) of section
34 of the CGST Act and a credit note is issued consequently, there is no requirement to
declare such credit note on the common portal by the supplier (i.e. by the person who has
issued the credit note) as tax liability cannot be adjusted in this case.

d) Further, where the time expired goods, which have been returned by the
retailer/wholesaler, are destroyed by the manufacturer, he/she is required to reverse the ITC
attributable to the manufacture of such goods, in terms of the provisions of clause (h) of sub-
section (5) of section 17 of the CGST Act. This has been illustrated in table below:

Date of Supply Date of return l'r eatment in terms of tax liability & credit
of goods from of time expired note
manufacturer/ goods from
wholesaler to retailer /
wholesaler/ wholesaler
retailer to wholesaler /
manufacturer
Case 1 I" July, 2017 20th September, Credit note will be issued by the supplier
2018 (manufacturer / wholesaler) and the same to
be uploaded by him on the common portal.

Page 3 of 4
 Circular No. 72/46/2018-GST

Subsequently, tax liability can be adjusted by

such supplier provided the recipient
(wholesaler / retailer) has either not availed
the ITC or if availed has reversed the ITC.
Case 2 l s July, 2017 201h October, Credit note will be issued by the supplier
2018 (manufacturei / wholesaler) but there is no
requirement to upload the same on the
common portal. Subsequently tax liability
cannot be adjusted by such supplier.

3. It may be noted that though this circular discusses the scenarios in relation to return of

goods on account of expiry of the same, it may be applicable to such other scenarios where
the goods are returned on account of reasons other than the one detailed above.
4. It is requested that suitable trade notices may be issued to publicize the contents. of this
Circular.

5. Difficulty if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.

(lipender Gupta)
Commissioner (GST)

Page 4 of 4