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TMI BlogGST ON POST SUPPLY DISCOUNTX X X X Extracts X X X X X X X X Extracts X X X X ..... GST ON POST SUPPLY DISCOUNT X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on commercial credit note will be charged. But A.O. denied the submission and charged tax. Pls guide. Reply By KASTURI SETHI: The Reply: Have you received any letter or SCN or is it all verbal ? Reply By tejas kulkarni: The Reply: Actually gst audit proceedings u/ 65 are in process. During audit offy raised this point. Reply By KASTURI SETHI: The Reply: Dear Querist, To understand the issue, you should peruse the paras no.7.4 & 7.5 of the following decision of AAR, A.P. Although this decision is applicable to the applicant only, yet it has persuasive value. 2023 (6) TMI 1051 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH - IN RE : VEDMUTHA ELECTRICALS INDIA PVT. LTD. Reply By KASTURI SETHI: The Reply: Only the absence of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract is not sufficient to prove that the transaction value has not been influenced by way financial /commercial credit note . Your books of account must prove that outward tax liability has not been reduced. Reply By Sadanand Bulbule: The Reply: Dear querist I fully agree with clear opinions of Sh. Sethi Sir. Reply By Shilpi Jain: The Reply: It's pretty difficult to explain and make understand department officers. If it's a discount then no GST should apply. If officer does not understand, you have no choice but to take notice and defend. Reply By Sadanand Bulbule: The Reply: Well said Shilpi madam. Many a times it is impossible to convince the departmental officers who carry empty skulls. May God save merits! Reply By K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASTURI SETHI: The Reply: The burden of proof is cast upon the person who avails exemption from tax or concessional rate of tax/duty------ the Supreme Court. Reply By KASTURI SETHI: The Reply: Sh. Sadanand Bulbule Ji, Sir, This is with reference to your opinion at serial no. 7 above. Human skull can never be empty as it consists of brain (can be likened to 'hardware' ) and mind (can be likened to 'Sofware' ) both. So the said registered person should discharge burden of proof. All is not bad. Still honesty, integrity and sincerity exist in India. Isn't it, Sir ? Reply By Sadanand Bulbule: The Reply: Dear Sirji My referral of "empty skulls" was not in its literal meaning.But despite having the brain, many ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers refuse to apply it. That's my bitter experience. Merit should not be murdered by diseased minds. Otherwise it is grave injustice to the humanity. Sky is not empty. Still stars spark and glitter. That is the bright promise of dark nights. With this, I agree with your views Sir. Reply By KASTURI SETHI: The Reply: Sh.Sadanand Bulbule Ji, Sir, Thus the word, 'empty skull' signifies 'empty of moral values'. This is the root cause of your bitter experience. Reply By Sadanand Bulbule: The Reply: Dear Sir ji As I have studied, the GST era is not just another tax reform. Rather it has sensitized peoples' lives like never before. The problem is not with the GST law per se. But many officers are still unwillin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to understand and accept the basic objects of it. Unless there is refined thinking, tremors of hyper-interpretation continues to be the common feature of its administration. It's like being crazy for fruits [revenue] without reverence to roots [law]. Bitter experience is not only mine but of countless victims, of course untold. Thus " Empty skull" symbolises lifelessness. What sprouts from lifelessness, there is no need to explain. Regards Reply By KASTURI SETHI: The Reply: Sh.Sadanand Bulbule Ji, Sir, I fully agree with your outpourings and genuine pangs. Reply By Ganeshan Kalyani: The Reply: Sir, if the recipient i.e. company is able to take credit, you can raise an tax invoice with GST and you pay it and ask the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany to claim credit. The officer's concern will be addressed. Explore this please. Reply By harish varun: The Reply: Dear [Authority Name], I am writing to address the matter concerning the output GST charged on the commercial credit notes received by one of our automobile dealers in the form of performance incentives/target incentives. The Assessing Officer has treated these as post-supply discounts without any agreement with the company, leading to the imposition of tax. In our defense, I would like to bring to your attention the latest judgment by the Honorable Madras High Court in the case of M/s Supreme Paradise - 2024 (2) TMI 351 - MADRAS HIGH COURT. The court clearly stated that unless the discount is offered on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a subsidy, it cannot form part of the transaction value. This judgment supports our position that the performance incentives/target incentives, provided as commercial credit notes, should not attract GST as they do not constitute a subsidy. Additionally, I would like to reference Circular No. 92/11/2019-GST, which clarifies that no tax should be charged on commercial credit notes. This circular explicitly states that commercial credit notes issued by the supplier to the recipient are not subject to GST as long as they do not meet the criteria for discounts specified under Section 15 of the CGST Act. Considering these points, it is evident that the performance incentives/target incentives provided as commercial credit notes do not qualify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as post-supply discounts that attract GST. Therefore, the imposition of output GST on these commercial credit notes is not justified. I kindly request a reconsideration of the decision to charge tax on these commercial credit notes in light of the aforementioned legal provisions and judicial precedent. Thank you for your understanding and cooperation in this matter. Yours sincerely, [Your Name] [Your Contact Information] Reply By Padmanathan Kollengode: The Reply: Without going through the actual audit para raised, it would be difficult to express a solid opinion. It would be pertinent to know on which angle the Audit Officer is charging output tax. Is it by way of treating the Commercial CN amount as consideration for a fresh suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y? If it is to increase the value of supply already made, on what grounds? etc.. Reply By SARTHAK GUPTA: The Reply: Respected Seniors, Is Purchase Orders Are Capable to Considered As Pre-Agreement-Condition of Post Supply Discount. Any Case Laws for this to Support. Reply By KASTURI SETHI: The Reply: Sh.Sarthak Gupta Ji, Answer is 'yes' provided that a purchase order must contain terms & conditions indicating the conditions of post-sale discount. Reply By KASTURI SETHI: The Reply: Also go through Section 74 of Indian Contract Act, 1872. Even verbal agreement/contract is also legally valid provided it is supported by documentary evidence e.g. email, phone etc. Reply By SARTHAK GUPTA: The Reply: Thank you sir for your rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly but i am stuck in a situation where appeal authority rejected my appeal on the grounds - "I have meticulously gone through the 'Purchase Orders' produced by the Appellant, I find that these purchase orders contain details of Brokers/Agents, through whom the said supply transactions were supposed to take place. Here, I wish to address that whenever a transaction takes place through a commission agent or a broker, especially of Mandi crops/commodities, it cannot be affirmed that when would such a transaction take place and between whom, i.e., it is not known before the supply, that who would be the recipient. Thus, if the transactions are carried out through a broker, then it cannot be said that the transaction has occurred under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement or a contract. Therefore, the arguments regarding considering the purchase orders as good as a pre-agreement or a contract document; placed by the Ld. AR are not found to be reinforced by the actual facts of the matter under dispute, nor are supported by the provisions stipulated in GST Law, hence I find no force in these contentions raised by the Appellant and hence the documents produced by the Appellant are not acceptable." Reply By KASTURI SETHI: The Reply: This case is fit for filing appeal. The factum of, 'intermediary' cannot be a hurdle in getting fair justice. An intermediary/agent/broker always works for and on behalf of the principal (owner). An intermediary is independently registered and pays GST. You wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l have to work hard to trace out case laws pertaining to the Contract Act in your favour. Indian Contract Act is applicable to all acts. A purchase order is a contract. There is no doubt to this effect at all. You need the art of drafting and art of presentation in the Appellate Tribunal. So you need the services of an expert. X X X X Extracts X X X X X X X X Extracts X X X X
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