A seller has sold goods to its customer. Tax Invoice was issued.
After 4 months he issued GST credit notes for giving rate discount and reversed GST. The discount was given to make for the losses incurred by his customer. The customer sold the goods to his ultimate customers at lesser rate than his cost so he availed discount from his supplier. This was a mutual implied agreement that the seller will give discount if the customer cannot make further sale of goods at a predetermined rate.
The customer has accepted the credit notes and he reversed his ITC on the invoices received from seller.
However there was no written agreement at the time of sale for the above discoun to justify it is a pre sale discount
1. Whether this GST reversal is correct or not?
2. Whether a written agreement should be drafted for the discount?