2021 (8) TMI 494 - AAR - GST

Tax liability of applicant - discount received through credit notes issued by the M/s. Hindustan Unilever Ltd., (First Supplier) - 1st proviso to Section 34 of CGST Act, 2017 - applicability of advance ruling given by the Hon'ble Kerala Authority for Advance Ruling IN RE M/S. SANTHOSH DISTRIBUTORS 2019 (11) TMI 223 - AUTHORITY FOR ADVANCE RULING, KERALA , is applicable to this applicant with respect to the credit notes given after supply - commercial credit notes or not - validity of value taken by the applicant is the invoice value prior to the discount - validity of monthly submission of GST return for the year 2017-18 on the basis of discount concepts - mismatch between the tax payment in Form 3B under CGST Rules and the GSTR 2A of the applicant, with respect to discount - steps to be taken by the applicant to safeguard applicant's interest in compliance with the provisions of GST law. Is there any further tax liability to the applicant on the discount received through credit notes issued 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 information regarding the passing over of discount by the supplier through the credit notes, this authority cannot issue any ruling on the above questions. Other issues are 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 rest questions.

Summary

Issues Involved:
1. Tax liability on the discount received through credit notes issued by M/s. Hindustan Unilever Ltd.
2. Applicability of the ruling in M/s. Santhosh Distributors case to the applicant.
3. Treatment of GST credit notes as commercial credit notes.
4. Error in procedure regarding discount and taxable value.
5. Steps for rectification of errors in GST returns for 2017-18 and 2018-19.
6. Provision for notices regarding mismatch between tax payment in Form 3B and GSTR 2A.
7. Steps to safeguard compliance with GST law.

Issue-Wise Detailed Analysis:

1. Tax Liability on Discount Received Through Credit Notes:
The applicant sought clarity on the tax liability for discounts received via credit notes from M/s. Hindustan Unilever Ltd. The provisions of Section 15(3) and Section 34 of the CGST Act govern the exclusion of discounts from the value of supply and the issuance of credit notes, respectively. However, the applicant failed to provide sufficient details about the nature and purpose of the discounts received. Consequently, the authority could not issue a ruling due to the lack of necessary information regarding the agreement or the specific circumstances under which the credit notes were issued.

2. Applicability of the Ruling in M/s. Santhosh Distributors Case:
The applicant inquired whether the ruling in the case of M/s. Santhosh Distributors (KER/60/2019 dated 16-09-2019) could be applied to their situation. The authority clarified that an advance ruling is binding only on the applicant who sought it and the jurisdictional officer concerning that applicant, as per Section 103(1) of the CGST Act. Therefore, the ruling in M/s. Santhosh Distributors is not automatically applicable to the applicant's case.

3. Treatment of GST Credit Notes as Commercial Credit Notes:
The applicant questioned the consequences of treating GST credit notes as commercial credit notes. The authority reiterated that the applicant did not provide sufficient details about the discounts received through credit notes. Without adequate information, the authority could not issue a ruling on this matter.

4. Error in Procedure Regarding Discount and Taxable Value:
The applicant queried whether there was an error in treating the invoice value prior to the discount as the taxable value, in light of Section 15(3) of the CGST Act. The authority noted that the exclusion of discounts from the value of supply is governed by Section 15(3), which specifies the conditions under which discounts can be excluded. Since the applicant did not provide details about the agreement or the specific circumstances of the discount, the authority could not determine if there was an error in the procedure.

5. Steps for Rectification of Errors in GST Returns for 2017-18 and 2018-19:
The applicant sought guidance on rectifying errors in the monthly GST returns for the years 2017-18 and 2018-19. The authority stated that questions regarding the rectification of errors are not within the matters specified under Section 97(2) of the CGST Act. Therefore, the authority has no jurisdiction to issue a ruling on this matter.

6. Provision for Notices Regarding Mismatch Between Tax Payment in Form 3B and GSTR 2A:
The applicant asked if there is any provision in GST laws to issue notices for mismatches between tax payments in Form 3B and GSTR 2A concerning discounts. The authority clarified that such questions do not fall under the matters specified in Section 97(2) of the CGST Act, and thus, the authority cannot issue a ruling on this issue.

7. Steps to Safeguard Compliance with GST Law:
The applicant inquired about the steps to safeguard their interest in compliance with GST law if there is a provision for notices regarding mismatches. The authority reiterated that questions about compliance steps are not within the jurisdiction of the matters specified under Section 97(2) of the CGST Act. Consequently, the authority cannot issue a ruling on this matter.

Conclusion:
The authority could not issue rulings on the primary questions regarding tax liability on discounts received through credit notes due to insufficient information provided by the applicant. Additionally, the authority stated that questions 3 to 9 do not fall under the purview of Section 97(2) of the CGST Act and therefore, it has no jurisdiction to issue rulings on these matters.