TMI Blog2021 (8) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the M/s. Hindustan Unilever Ltd., (First Supplier)? - In the light of the 1st proviso to Section 34 of CGST Act, 2017, is there any tax liability on the applicant for the discount received on the basis of credit notes issued by the First Supplier? - HELD THAT:- Sub-section (3) of Section 15 of the CGST Act clearly specifies the circumstances under which and the conditions subject to which any discount can be deducted / excluded for determining the taxable value of a supply. From the facts as stated by the applicant it is seen that the discount received through credit note is a post - supply discount. However, the applicant has not stated whether such discount is established in terms of an agreement entered into at or before the time of such supply. The applicant has neither produced the copy of the agreement entered into by them with the supplier nor disclosed any details of the agreement. Though the applicant has produced a copy of the credit note issued by the supplier, the credit note does not contain any particulars whereby the nature and purpose of the discount and the circumstances under which the credit note was issued could be discerned - in the absence of necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply does not include discount. In this case, the value taken by the applicant is the invoice value prior to the discount. Is there any error in such procedure? 7. If any error has occurred in the monthly submission of GST return for the year 2017-18 on the basis of discount concepts, what are the steps to be taken by this applicant to rectify such errors for the years 2017-18 and 2018-19? 8. Is there any provision in the GST laws to issue notices to the applicant alleging mismatch between the tax payment in Form 3B under CGST Rules and the GSTR 2A of the applicant, with respect to discount? 9. If there is any such provision as asked for in Question 8, what are the steps to be taken by the applicant to safeguard applicant's interest in compliance with the provisions of GST law? 4. Contentions of the Applicant: 4.1. The applicant has been purchasing consumer products mainly from M/s. Hindustan Unilever Ltd., hereinafter referred to as 'First Supplier'. Since 2017-18, the applicant has been receiving taxable goods from the First Supplier. The First Supplier would subsequently issue certain credit notes of discount after the supply of goods to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category mentioned under Section 15(3) of CGST Act because the discount is not included in the Invoice, the discount is not given as per agreement or specifically linked to any invoices, and the input tax credit attributable to the discount has also not been reversed by the Applicant. Therefore, by application of Section 15 (3), the discount is to be included in the value of supply and the applicant is eligible to the Input Tax Credit due on the full value of the supply. In the Advance Ruling in the case of Santhosh Distributors (Advance Ruling No. KER/60/2019 dated 16.09.2019), similar issue was considered and the Authority had held that the Original Supplier could not reduce their Output Tax Liability on the basis of discount provided through commercial credit note, and that therefore the Applicant therein was not liable to reduce their ITC. It is this Applicant's query whether this Advance Ruling can be followed in the Applicant's case as well. 5. Comments of the Jurisdictional Officer: The jurisdictional officer submitted that the products dealt by the dealer are FMCG products of M/s Hindustan Unilever Ltd. The dealer filed application for Advance Ruling cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismatch between the tax payment in Form 3B under CGST Rules and the GSTR 2A of the applicant, with respect to discount and if such provision exists, what are the steps to be taken by them to safeguard their interest in compliance with the provisions of GST law. 7.2. Section 95(a) of CGST Act defines 'advance ruling' as follows: - (a) advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; 7.3. From the above definition it is evident that an applicant can seek an advance ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103(1) of the CGST Act such an Advance Ruling is binding only on the applicant and on the Officer Concerned or the jurisdictional Officer in respect of the applicant. 7.4. Section 97 of the CGST / SGST Act specifies about the application for advance ruling. Section 97 of the CGST/ SGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discount received by the applicant through the credit notes issued by the supplier as per provisions of Section 34 of the CGST Act. The exclusion of any discount from the value of supply is governed by the provisions of sub-section (3) of Section 15 and the issue of credit and debit notes by the provisions of Section 34 of the CGST Act. The relevant provisions are reproduced below; 15 (3): - The value of the supply shall not include any discount which is given- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. 34. Credit and debit notes. - (1) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment entered into at or before the time of such supply. The applicant has neither produced the copy of the agreement entered into by them with the supplier nor disclosed any details of the agreement. Though the applicant has produced a copy of the credit note issued by the supplier, the credit note does not contain any particulars whereby the nature and purpose of the discount and the circumstances under which the credit note was issued could be discerned. Further they have also not disclosed any information regarding the nature and purpose of the credit note or on the circumstances in which the credit note is issued by the supplier. Therefore, in the absence of necessary information regarding the passing over of discount by the supplier through the credit notes, this authority cannot issue any ruling on the above questions. 9. The Question Nos. 3 to 9 is not in respect of any matter that is specified in Section 97 (2) of the CGST Act. This authority being a creature of statute has to function within the limits of the jurisdiction conferred on it. Accordingly, the jurisdiction of this authority does not extend to issue rulings on the questions at Sl. Nos. 3 to 9. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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