9911796707
TMI Blog2008 (4) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ive credit notes to the petitioners by way of incentives for sale of various goods under various schemes. The assessing officers, in all the cases, considered the amount covered by the credit notes as discount given by the suppliers and, consequently, while giving input tax credit, tax attributable to the credit note amount was reduced, thereby reducing the input tax credit claimed by the petitioners based on purchase bills. The input tax credits on credit note amounts were reduced because petitioners have not complied with circular No. 41/07 dated September 18, 2007 issued by the Commissioner of Commercial Taxes, produced as exhibit P2 in W.P. (C) No. 9806 of 2008. According to the petitioners, the requirement of circular, among other thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany or firm registered under the Companies Act, 1956 (Central Act 1 of 1956) and Indian Partnership Act, 1932 (Central Act 9 of 1932) (or society including a co-operative society or association of individuals whether incorporated or not) of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. Explanation I.-. . . Explanation II.- . . Explanation III.-Subject to such conditions and restrictions, if any, as may be prescribed in this behalf, (i) . . . (ii) Any discount on the price allowed in respect of any sale where such discount is shown separately in the tax invoice and the buyer pays ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objective is to ensure collection of tax in accordance with the Act. It is seen from circular No. 41 of 2007 that it is issued, specifically in the context of marketing of cement by cement companies through dealers. The conditions stated in the circular are as follows: "(i) The cement companies should have remitted the entire tax collected as per sale bills without any deduction along with interest within February 28, 2007. (ii) The cement companies shall issue declarations to its distributors that they have paid the entire tax shown in their sale bills from April 1, 2005 without reducing it consequent on trade discount. (iii) The cement distributors shall submit such declarations to their assessing authorities and ensure that excess inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tood in trade are in various forms, such as cash discount, trade discount, turnover discount, etc., which were and still allowable to a large extent under several court decisions and under the prevailing sales tax laws, which are concurrently in force along with the KVAT Act for some goods. The object of the circular is only to clarify that, contrary to the common notion, discount given after sales through credit notes is not allowable under the KVAT Act. The circular cannot be challenged unless it is against the statute or the conditions provided in the circular are impossible or at least difficult of performance. The requirement of a confirmation from the supplier who issues the credit note will ensure that he does not later claim refund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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