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of <h1>Court excludes trade discount from taxable turnover under Tamil Nadu VAT Act, 2006.</h1> <h3>KUN Motor Company Pvt. Ltd. Versus The Assistant Commissioner (CT), Chennai</h3> KUN Motor Company Pvt. Ltd. Versus The Assistant Commissioner (CT), Chennai - [2020] 80 G S.T.R. 98 (Mad) Issues:Taxability of trade discount under the Tamil Nadu Value Added Tax Act, 2006.Analysis:The petitioner sought a Writ of Certiorari to challenge an order proposing to assess a trade discount received from a manufacturer as taxable under the TNVAT Act, 2006. The respondent demanded tax on the discount amount, contending it should be treated as value addition. The petitioner argued that the discount should not be added to the taxable turnover, citing relevant provisions of the Act.The petitioner responded to the notice, explaining that the discount should not be included in the taxable turnover. Despite producing relevant documents during a personal hearing, the impugned order was passed by the respondent, noting the petitioner's failure to provide documentary evidence related to the transactions.The petitioner relied on a circular issued by the Commissioner of Central Excise, emphasizing that the trade discount should not be taxed under Section 19(20) of the TNVAT Act, 2006. The petitioner's counsel referenced Supreme Court decisions to support the contention that trade discounts should not be included in the turnover for tax assessment purposes.The court found that the trade discount offered by the manufacturer to the petitioner did not enhance the taxable value of the cars sold by the petitioner to retail buyers. The court concluded that the trade discount was an independent transaction between the manufacturer and the petitioner, and therefore should not be added to the petitioner's taxable turnover. The court allowed the writ petition, noting the absence of disputed facts and the lack of basis to tax the trade discount as part of the petitioner's turnover under the TNVAT Act, 2006.
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