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TMI Blog2019 (3) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... raising invoices. The discount is given after the invoices are raised and supply of goods is made and no discount is recorded in the invoice. Hence, Section 15 (3) (a) does not apply. All the invoices are uploaded by the supplier in the C2FO software after they are raised. Based on various parameters such as desired annual percentage discount rate, cash availability set by the recipient and the varied offers of discounts made by the suppliers based on their need for an early payment, C2FO software optimizes the dates of early payment for each invoice and determines the final discounted transaction value of a particular invoice - the value of supply in such transactions is the full undiscounted value mentioned on the invoice. Proviso to Section 16 states that where a recipient fails to pay to the supplier of goods or services or both, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, and the recipient shall be entitled to avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of application in Form GST ARA - 01 and also submitted the copy of Challan evidencing payment of application fees of ₹ 5,000/-each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has informed that they intend to enter into an arrangement with M/s. C2FO INDIA LLP ( hereinafter referred as C2FO), a subsidiary of Pollen Inc, having its Indian Office at, 303, OIA House, 470, Cardinal Gracious Road, Andheri (East), Mumbai 400099, Maharashtra, India for setting up an interactive automated data exchange which can be installed for data interaction relating to sale purchase of goods and services between a Buyer (the Applicant) and a Supplier (any supplier of goods or input services of thc Applicant) in compliance to various ethical, accounting and business standards. Both the Supplier and Recipient of goods or services should register on the platform provided by C2FO. The transactions are explained by the Applicant as follows: Based on the defined schedule, C2FO outbound program will extract approved open invoices (remaining unpaid) and Supplier (vendor) data from SAP and transfer the data to C2FO cloud on AWS (Amazon Web S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count not agreed before or at the time of supply . 2.3 The Applicant stated that as per Section 15(3) of CGST Act, discount in this case is not allowable for deduction from the price at the time of supply since the same is known either before or at the time of supply. The taxable value for the purpose of payment of GST will be the value as per purchase contract without considering such discount so offered and the supplier is liable to pay tax on the value before discount. As per Section 16(2), a person who fails to pay to the supplier of goods, the amount towards the value of supply along with the tax payable within a period of 180 days from date of invoice, ITC taken by him shall be added to the output tax liability. Value of supply is the value on which GST is payable by the supplier. In the present case, the buyer pays price minus the discount plus GST on the value without considering discount, since such discount is not allowed for deduction from price. GST is paid by the supplier on the entire price of the goods without considering the discount. Recipient will pay the discounted price along with GST on the original price to the supplier. The Applicant states that the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered on the C2FO software platform, place discount offer, either Annual Percentage Rate or flat discount to receive early payment. The C2FO algorithms use settings of desired annual percentage rate, minimum Annual percentage rate, cash availability to decide on which invoices are chosen for early payment. This process happens continually in which the discount offers can be varied by the vendors which would determine the amount and date of payment for each of these invoices. Screenshots of the software pertaining to the Applicant shows that the Applicant can set a desired annual percentage rate either monthly or quarterly and also set the cash availability monthly. This cash availability can be replenished periodically. It displays the suppliers who are participating at any given time. Screenshots of software pertaining to the suppliers show that each invoice is shown with original due date, invoice amount, discount offered and how many days it was paid earlier than due date. 4.2 From the various submissions, it is scen that the Applicant intends to enter into an agreement with C2FO for setting up an interactive automated data exchange which can be installed for data interact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il and collected in such manner as may be prescribed and shall be paid by the taxable person. Section 12 of CGST Act states: 12. (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time supply goods shall be the earlier of the follozving dates, namely:- (a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: Section 15 (3) of CGST Act states (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 iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. 4.3 Section 16(1) states that a registered recipient is eligible to take credit on the input tax charged on any supply of goods or services. As per Section 9(1) of the act, CGST tax is leviable on the value of supply as determined by Section 15 of the Act. Section 15 (3) states that value of supply does not include any discount which is given 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 those discounts given after the supply has been effected, if 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 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. Time of supply of goods as per Section 12 is the earlier of the following dates, namely the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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