2020 (7) TMI 226 - AAR - GST

Maintainability of Advance Ruling application - Proportionate reversal of Input Tax Credit - reduction in the value of supply - HELD THAT - The question with regard to reversal of input tax credit, raised by the applicant is not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. This question may be raised only by the concerned dealer and not by the applicant. Hence in view of the provisions of Section 95 of the GST Act, this authority is not allowed to answer the question raised by the applicant, being out of the purview of Sec. 95 of CGST Act. Whether commercial credit note can be issued to its dealers for post sale discounts without charging GST? - HELD THAT - In the instant case, the question which has been raised by the applicant is not pertaining to any of the matters mentioned in Section 97 (2) of the GST Act. In fact the question raised is with respect to procedure which the applicant wants to follow. Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of whether the applicant can issue commercial credit note to its dealers for post-sale discounts without charging GST. Hence, it is held that this authority does not have jurisdiction to pass any ruling on such matters. The questions posed does not pertain to matters in respect of which an Advance Ruling can be sought under the GST Act. In view thereof, we find that the impugned application is not maintainable. No proceeding of Advance Ruling under the GST Act lies in the instant case.

Summary

Issues:
1. Whether the dealer is required to reverse input tax credit proportionate to the reduction in the value of supply?
2. Whether the applicant can issue commercial credit notes to its dealers for post-sale discounts without charging GST?

Analysis:

Issue 1:
The applicant sought an advance ruling regarding the reversal of input tax credit by dealers in case of post-sale discounts. The applicant contended that dealers should not reverse the credit as they have reimbursed the GST on the undiscounted transaction value at the time of supply. The Authority noted that the question raised by the applicant was not within the purview of Section 95 of the GST Act, as it pertained to the dealers and not the applicant. The Authority referenced a previous case to highlight that the question must be raised by the concerned dealer. Therefore, the Authority held that it was not allowed to answer the question raised by the applicant.

Issue 2:
The second query was related to whether the applicant could issue commercial credit notes to dealers for post-sale discounts without charging GST. The Authority stated that the question did not fall under the matters specified in Section 97(2) of the CGST Act. The Authority highlighted that Section 97(2) dealt with specific issues for which an advance ruling could be sought, and the procedure the applicant wanted to follow was not covered. Consequently, the Authority concluded that it did not have jurisdiction to rule on such matters. As a result, the application for advance ruling was deemed non-maintainable, and the Authority rejected the application.

In conclusion, the Authority rejected the application for advance ruling as it did not have jurisdiction to address the questions raised by the applicant. The ruling emphasized the limitations of the Authority's scope in providing rulings on matters that did not fall within the specified sections of the GST Act.