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2023 (6) TMI 1051 - AAR - GSTReversal of GST credit - Tax invoice issued by supplier and GST was paid by such supplier to government even though later commercial/ financial credit note is issued for part amount of invoice - requirement of reversal of ITC proportionately to the extent of financial/ commercial credit note issued by supplier. HELD THAT:- The discount value shall not be included, as per 15 (3) (b), when such supply has already been affected and the discount is established as per terms of an agreement at or before the time of such supply and there is a link to the invoices of the discount given. Further, the ITC attributable to the discount is to be reversed by the recipient of the supply. On examination of the transaction between the applicant and their supplier, M/s Gold Medal, it is found that the supplier is issuing a tax invoice on the supply of goods to the applicant and the applicant is taking ITC on the same. The applicant is issued commercial credit note or financial credit notes under various schemes such as turnover discount, quantity discount, additional scheme discount etc. The credit. notes issued are without GST and as per the applicant were issued only for accounting purpose as also given in undertaking by the supplier. The credit notes are duly accounted in the book of accounts of the applicant and also in their income tax returns - For the applicability of provisions of 15 (3) (b) there should be prior agreement and a link established with the relevant invoices of the discount given. No such co-relation between the credit notes issued by the supplier to the applicant is found except credit note mentioning the scheme and the goods for which the credit note is being given. In absence of such specific Information, the benefit of lessening the value of discount from the transaction value as per the provisions of 15 (3) (b) is not allowed and therefore the contention of the applicant is correct. However, it is pertinent to note that the financial credit note shall not be used as a conduit to transfer input tax credit fraudulently, by raising an Invoice for a higher value to transfer ITC and then reducing the transaction value though financial credit note whereas the ITC transferred Is left unaltered. In case such a misutilisation of financial credit note is noticed at any point the same shall be liable for penalties under section 132(b). The applicant is not required to reverse ITC, provided the dealer pays the value of the supply as reduced after adjusting the amount of post-sale discount in terms of financial/commercial credit notes received by him from the supplier of goods plus the amount of original tax charged by the supplier.
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