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TMI Blog2016 (2) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... as been completed provided the discounts are customary practice in the trade or otherwise known as trade discount and that the onus of proving the said fact was on the assessee and he ought to demonstrate that the discount given was in accordance with the provisions of the Act and Rules - the referred case by petitioner is squarely applicable to the present case - the petitioner has made out a case - petition allowed - decided in favor of petitioner. - Writ Petition Nos. 24493, Writ Petition Nos. 41250 to 41272 of 2015 (T-KST) - - - Dated:- 16-2-2016 - Anand Byrareddy, J. Rabinathan G. for the petitioner S. V. Giri Kumar, Additional Government Advocate, for the respondents ORDER Heard the learned counsel for the petitioner and the learned Additional Government Advocate appearing for respondent Nos. 1 to 4. 2. The petitioner claims that it is a dealer in cars and is entitled to deduction of discounts allowed to customers in the sale price of cars after the cars were sold by issuing credit notes as authorized by rule 31 of the Karnataka Value Added Tax Rules, 2005 (hereinafter referred to as the KVAT Rules , for brevity) read with section 30 of Karnataka Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract or agreement entered into in a particular case and the tax invoice or bill of sale issued in respect of the sales relating to such discount shows the amount allowed as discount; and Provided further that the accounts show that the purchaser has paid only the sum originally charged less discount. Section 30 of the KVAT Act reads as follows: 30. Credit and debit notes.-(1) Where a tax invoice has been issued for any sale of goods and within six months from the date of such sale the amount shown as tax charged in that tax invoice is found to exceed the tax payable in respect of the sale effected or is not payable on account of goods sold being returned within the prescribed period, the registered dealer effecting the sale shall issue forthwith to the purchaser a credit note containing particulars as prescribed. (2) Where a tax invoice has been issued for sale of any goods and the tax payable in respect of the sale exceeds the amount shown as tax charged in such tax invoice, the registered dealer making the sale, shall issue to the purchaser a debit note containing particulars as prescribed. (3) Any registered dealer who receives or issues, credit notes or debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to prompt repayment. The issuance of the credit notes would automatically mean that the amounts as mentioned in the invoices would be reduced which would result in reduction in the over all turnover relating to the goods sold for the particular month. However, we find that the Tribunal has not taken into consideration various details with regard to variation in the total turnover on account of the credit notes issued. The Tribunal merely proceeds on the basis that there is a conflict between rule 3(2)(c) and rule 31 of the Rules. In fact, it is necessary to note that rule 3(2)(c) of the Rules pertains to the discounts that can be allowed in terms of the regular practice whereas rule 31 is with regard to particulars of credit and debit notes which have to be furnished by the registered dealers as and when the credit notes are issued to the purchasers which would automatically result in variation in the amounts as stated in the invoices issued. There is in fact no conflict between the aforesaid Rules. In fact, when sale invoices are given by the respondent that would be total turnover of the respondent-assessee but when credit notes are subsequently issued by the assessee, it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Commissioner of Commercial Taxes, in revision, set aside the order of the Joint Commissioner of Commercial Taxes (Appeals) and confirmed the order passed by the assessing officer. On an appeal against the revision order, this court had framed the following issue for consideration (page 524 in 71 VST): Whether it is permissible for the assessee to show the discount given by a separate credit note subsequently and claim deduction even though the said discount is not shown in the tax invoice or sale bill ? This court referred to the earlier judgment in State of Karnataka v. Reliance Industries Ltd., Bangalore [2012] 51 VST 274 (Karn); [2010] 68 Kar. LJ 337, wherein it was held that rule 31 was with regard to particulars of credit and debit notes which were to be furnished by registered dealers. As and when the credit notes were issued to the purchasers, it would automatically result in variation in the amounts stated in the tax invoices. When the sale invoices were issued, that would be the total turnover of the assessee and when credit notes were subsequently issued, it would automatically result in lower amount of turnover, which would result in a lower quantum of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IFB Industries Limited, Mahadevpura, Bangalore v. Commercial Tax Officer (Audit) [2015] 4 VST-OL 206 (Karn); [2014] 80 Kar. LJ 292-order dated July 31, 2014 passed by a learned single judge of this court. A learned single judge of this court has held that once the order passed by the Karnataka Appellate Tribunal was not challenged and therefore attained finality, the order becomes binding on the authority and refusal to give effect to the order amounts to breach of judicial discipline. It was also held that even if the Tribunal's order was erroneous, when it has not been set aside by the higher forum, it is binding on the parties. 5. The learned counsel for the petitioner would contend that the State has not filed any special leave petition before the Supreme Court disputing the correctness of the law laid down in the above cited judgments rendered in the context of rule 31 of the KVAT Rules read with section 30(3) of the KVAT Act. There has also been no recommendation for placing the judgments before a Full Bench. Thus, the judgments are final and conclusive as regards the applicability of rule 31 and interpretation to be given to the scope and effect of the same, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 31 could not be availed of by registered dealers to issue credit notes, after the sales were effected, to allow discounts in the sale prices and to claim the credit notes in the returns filed for the months in which the credit notes are issued or received. The learned counsel would therefore contend that the judgments do not in any way affect the entitlement of registered dealers under rule 31 to allow discounts in the sale prices post-sales by issuing credit notes to the purchasing dealers and to claim the credit notes directly on the returns filed in the months in which the credit notes were issued or received in terms of sub-section (3) of section 30 of the Act. It is contended that insofar as the decision in Southern Motors v. State of Karnataka [2008] 18 VST 161 (Karn), is concerned, the order upholds constitutional validity of rule 3(2)(c) and it is not on the entitlement or otherwise of registered dealers to issue credit notes, post-sales, and allow discounts to the purchasing dealers in terms of rule 31. Insofar as the decision in State of Karnataka v. Kitchen Appliances India Limited, Bangalore [2012] 51 VST 439 (Karn); [2011] 71 Kar. L.J. 234, is concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot deal with the determination of turnover. If a credit note is given under rule 31 reducing the tax amount, then it is for the dealer to declare the credit note in the return furnished to the tax authority and claim reduction in tax on such total turnover. Thus, the said decision is to the effect that the registered dealers issuing credit notes for discounts are authorized to claim deduction of the discounts from total turnover declared in the monthly returns filed and the disentitlement is only in regard to claiming the deduction in the computation of taxable turnovers in terms of sub-rule (2) of rule 3 of the Rules. Attention is drawn to the relevant portion of the judgment, which is reproduced herebelow (para 12, page 586 in 3 VST-OL): 10. How the credit note and debit note is to be issued is provided under rule 31 of the Rules. Again, the particulars which are to be set out in such a credit note is provided in clause (7). All that is mentioned is the value of the goods and the amount of tax credited and debited to the buyer is to be set out in the invoice. If rule 31 is read with section 30 in the case of charging of excess tax, in the credit note what is to be mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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