Chemists in Pune and across the country are facing several issues while implementing the Goods and Services Tax (GST), especially during transactions pertaining to expired and recalled products. They have written to GST Commissioner Upender Gupta, raising concerns about how certain GST norms contradict some of the regulations under different Acts that govern medicine trade.In the letter to Gupta, sent on October 4, J S Shinde, president of the All India Organisation of Chemists and Druggists, has urged authorities to increase the period for return of expired goods.There are procedural problems as pharma products, whose average expiry period is three years, are returned on expiry via the credit note route, said Rohit Karpe, treasurer at the Chemists Association of Pune district.
As per provisions of the Drugs and Cosmetics Act, 1940, the retailer cannot prepare the sales invoice to the wholesaler for expired medicines. Also, the wholesaler cannot raise the invoice on the company for the return of the goods.However, Shinde pointed out that under GST, goods can be returned to the wholesaler after preparing the invoice, and this contradicts provisions of the Drugs and Cosmetics Act. Before GST, retailers would usually get a credit note from distributors or stockists for the value of expired stocks that have been returned, and then the distributors would get a credit note or replacement of stocks from manufacturers.
“Usually, there is a period of three years between the date of manufacture and the date of expiry for any medicine. After three years, the retailers often return the goods under their challan to the wholesaler, who in turn sends it to the company. The company provides the credit note with excise duty and sales tax. There are several transactions between the company and the wholesaler and the retailers. So, it is practically impossible to link the return quantity with the purchase invoice,” explained Vijay Changediya, secretary of the Chemists Association of Pune district.As per GST norms, a retailer is required to make a reverse sale of expired or recalled medicines to distributors, and raise a tax invoice, and the same is done by the distributor to the manufacturer. But according to the Drugs and Cosmetics Act, a dealer cannot issue a sales invoice pertaining to expired medicines, and this is causing a bit of confusion, said Shinde. “We have urged that the period for the return of expired goods be increased, considering the peculiar circumstances of the pharma trade,” he said.