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TMI Blog2024 (2) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... /2019-GST dated 07.03.2015 and clarification issued vide circular No.92/11/2018-GST dated 07/03/2019) are not relevant to the facts of the present case either in support of the present writ petition or in favour of the respondent to dismiss the writ petition. They are not in any event binding on this Court in terms of the decision of the Collector of Central Excise Vs. Dhiren Chemical Industries [ 2002 (2) TMI 115 - SC ORDER] . The Hon'ble Supreme Court held that clarification of the Board are not binding on the Courts though they may bind the Assessing Officers and field formations - Under the scheme of the respective GST Enactments, 2017 each instance of supply of goods or services are chargeable to tax under Section 9. The expression supply has been defined in Section 7 if the respective GST Enactments, 2017. The discount offered to the petitioner can impact only the transaction value of the supplier of the petitioner. As far as the transaction value of the petitioner is concerned, it is the price which has been paid or actually payable for the supply of the goods - there is no scope for confusing the discount offered to the petitioner and the discounted price at wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the respective assessment years are different and are based on the information gathered before passing of the respective impugned orders for the respective assessment years. 4. For the sake of clarity, relevant portion of the impugned order passed for the assessment year 2018-19 is reproduced below:- The wordings of Section 15(3)(b)(i) very clearly states that if the quantum of discount is given after the supply of foods has taken place, it has to be given as per the terms of such agreement i.e., it cannot be open ended/not based on any criteria. Thus this quantum of discount cannot be arrived without any basis, only at the discretion of the supplier. The supplier has to clearly mention the quantum of discount or percentage of discount which is to be worked out on the basis of certain parameters or certain criteria which may be agreed to between the supplier and the recipient and which are predetermined and mentioned in agreement in respect of supply of the goods. Thus, the bare word 'discount' if left open ended or without any quantifications or criteria attached can mean there can be any percentage of discount ranging from bare minimum to even 100% as per d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Section 15(3) of CGST Act, 2017 / TNGST Act, 2017 provides that the discount which do not qualify the conditions stated therein cannot be deducted in arriving at the transactional value. The Petitioner has not deducted the volume discount amount from the invoice value while arriving at the transactional value for GST levy purposes. It is further submitted that the invoice value (without deduction of the volume discount amount) including the GST is paid to the Vendor supplier. Hence, it is submitted that the Petitioner need not pay any further tax on the volume discount amount as stated by the Respondent. Therefore, the impugned order is erroneous and has to be quashed. 11. It is submitted that the Respondent failed to appreciate the prevalent business practice where the manufacturer would direct the dealer to sell the mobile phones at a discounted price for a particular season and that such discount cannot be construed as subsidy as contemplated u/s. 15(2) of TNGST Act, 2017. 12. It is submitted that the Respondent failed to appreciate that there shall be no specific criteria, basis or rationale for arriving at discount for a particular mobile phone and it shall purel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action allowing discount has to be proved on the basis of contemporaneous records. The relevant portion of the judgement is extracted below: On an overall review of the scheme of the Act and the Rules and the underlying objectives in particular of Sections 29 and 30 of the Act and Rule3 of the Rules, we are of the considered opinion that the requirement of reference of the discount in the tax invoice or bill of sale to qualify it for deduction has to be construed in relation to the transaction resulting in the final sale/purchase price and not limited to the original sale sans the trade discount. However, the transactions allowing discount have to be proved on the basis of contemporaneous records and the final sale price after deducting the trade discount must mandatorily be reflected in the accounts as stipulated under Rule 3(2)(c) of the Rules. The sale/purchase price has to be adjudged on a combined consideration of the tax invoice or bill of sale as the case may be along with the accounts reflecting the trade discount and the actual price paid. The first proviso has thus to be so read down, as above, to be in consonance with the true intendment of the legislature and to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is between the manufacturer who is also a dealer who had passed on incentives to the petitioner and the second transaction between the petitioner and its buyers of its retail show room to whom the petitioner has sold the cars. As these two are independent transactions there is no basis on which the trade discount passed to it by the manufacturer (dealer) to the petitioner can be added into the taxable turnover of the petitioner for the purpose of assessment under the TNVAT Act 2006. 23. Therefore, in any event the Impugned Order passed by the Respondent is unsustainable under law and is liable to quashed. 24. Mr.S.Sathyanarayanan, learned counsel for the petitioner would further submit that the issue is squarely covered by a decision of this Court in Kun Motor Company Private Limited, Represented by its Accounts Manager Vs. The Assistant Commissioner (CT) 2020 SCC Online Mad 28128 rendered on 20.01.2020 in the context of Tamil Nadu Value Added Tax Act (TNVAT) Act, 2006. 25. The respondent has not filed the counter. However, the case was argued as the dispute does not pertain to any disputed question of facts and dispute pertained to only interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply provided they satisfy the parameters laid down in sub-section (3) of Section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document(s) issued by the supplier. (iv). It is further clarified that the supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts. 30. It is therefore, submitted that these writ petitions are not maintainable as the petitioner has alternate remedy under Section 107 of the respective GST enactments that has been also mentioned in the preamble to the respective orders. 31 . I have heard both Mr.S.Sathyanarayanan, learned Counsel for the petitioner and Ms.Amirtha Poonkodi Dinakaran, learned Government Advocate. I have also perused all the documents and affidavits filed in support of these writ petitions. 32. I have also perused the impugned orders and clarifications issued by the Central Board of Indirect Taxes and Customs. Although the Court exercising its jurisdiction under Article 226 of the Constitution, Section 7 of the TNGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the discount on the basis of document (s) issued by the supplier. iv. It is further clarified that the supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts. D. Secondary Discounts i. These are the discounts which are not known at the time of supply or are offered after the supply is already over. For example, M/s A supplies 10000 packets of biscuits to M/s B at Rs. 10/- per packet. Afterwards M/s A re-values it at Rs. 9/- per packet. Subsequently, M/s A issues credit note to M/s B for Rs. 1/- per packet. ii. The provisions of sub-section (1) of section 34 of the said Act provides as under: Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to supply of service by dealer to the supplier of goods. The dealer, being supplier of services, would be required to charge applicable GST on the value of such additional discount and the supplier of goods, being recipient of services, will be eligible to claim input tax credit (hereinafter referred to as the ITC ) of the GST so charged by the dealer. 4. It is further clarified that if the additional discount is given by the supplier of goods to the dealer to offer a special reduced price by the dealer to the customer to augment the sales volume, then such additional discount would represent the consideration flowing from the supplier of goods to the dealer for the supply made by dealer to the customer. This additional discount as consideration, payable by any person (supplier of goods in this case) would be liable to be added to the consideration payable by the customer, for the purpose of arriving value of supply, in the hands of the dealer, under section 15 of the CGST Act. The customer, if registered, would be eligible to claim ITC of the tax charged by the dealer only to the extent of the tax paid by the said customer to the dealer in view of second proviso to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 9. The expression supply has been defined in Section 7 if the respective GST Enactments, 2017. 38. Section 7 of the TNGST Act, 2017 reads as follows: 7. (1) For the purposes of this Act, the expression -supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (d) 3 [Omitted] (1A) -Where certain activities or transactions, constitute a supply in accordance with the provisions of subsection (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.; (2) Notwithstanding anything contained in sub-section (1), (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 43. As per Section 15(1) of the respective GST Enactments, the transaction value is the price actually paid or payable for the supply of the goods or services or both were the supplier and the recipient of the supply are not related and the prices the sole consideration for the supply. 44. Where, the supplier offers discounts to buyer/recipient, such discount cannot form part of the transaction value of the buyer/recipient on further supply to his client or customer as the case may be. 45. Section 15(2)(e) of the respective GST Enactments will come into play only when a part of the consideration payable for the supply by respondent is subsidised by a 3rd party other than the Central Government or the State Government. The subsidy will get embedded into the transaction value only if the subsidy is disguised as a discount. 46. A further sale or supply of goods or services by the recipient of such goods or services at a discounted price cannot form part of the transaction value of such recipient/seller, unless such discount was on account of the subsidy for such supply given by a 3rd party and was disguised as a discount. 47. If the value of supply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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