Supplier volume discounts and GST valuation u/s15(3): dealer faced alleged double taxation; assessment quashed, fresh orders ordered.

GST valuation under s.15(3) of the State GST Act was in issue, specifically whether "volume discount" received by the dealer warranted a further GST demand as if it formed part of the dealer's outward transaction value, resulting in alleged double taxation. The HC held that GST is attracted on each independent "supply" under ss.7 and 9, and a discount granted by the dealer's supplier can affect only the supplier's transaction value, not the dealer's taxable value on its separate onward sales, unless it operates as an undisclosed subsidy compensating the dealer outside the invoice. Board circular clarifications were held non-binding on the HC. The assessment orders were quashed and matters remitted for de novo orders on merits within three months.

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Issues Involved:
1. Legality of the impugned assessment orders for various assessment years.
2. Jurisdiction and applicability of Section 15 of the CGST Act, 2017 / TNGST Act, 2017.
3. Validity of levying GST on volume discounts.
4. Availability of alternate remedy under Section 107 of the respective GST enactments.

Summary:

1. Legality of the Impugned Assessment Orders:
The petitioners challenged the impugned assessment orders for the years 2017-18 to 2021-22. The impugned orders demanded tax, imposed penalties, and charged interest based on information gathered before passing the orders.

2. Jurisdiction and Applicability of Section 15 of the CGST Act, 2017 / TNGST Act, 2017:
The impugned orders concluded that discounts on the value of supply can only be allowed as specified in Section 15(3)(a) and (b) of the GST enactments. The orders stated that the value of supply shall not include any discount given after the supply unless it is established in terms of an agreement entered into at or before the time of supply and specifically linked to relevant invoices, and input tax credit attributable to the discount has been reversed by the recipient.

3. Validity of Levying GST on Volume Discounts:
The petitioner argued that GST is levied on the entire invoice amount, which includes volume discounts. Since the volume discount is already part of the transactional value, it cannot be added again to the invoice value for GST purposes, as it would result in double taxation. The petitioner contended that the impugned order is erroneous and should be quashed.

4. Availability of Alternate Remedy under Section 107 of the Respective GST Enactments:
The respondent argued that the petitioner has an alternate remedy before the Appellate Commissioner under Section 107 of the CGST/SGST Act and that the writ petitions are not maintainable. The respondent also relied on clarifications issued by the Central Board of Indirect Taxes and Customs regarding discounts.

Court's Conclusion:
The court held that the impugned orders are liable to be quashed and remitted the cases back to the respondent for passing a de-novo order. The court observed that the discount offered to the petitioner cannot form part of the "transaction value" of the petitioner unless it is linked to a subsidy by a third party. The court directed the respondent to pass an order on merits within three months from the date of receipt of the order, following the procedure in place at the time when the notice was issued. The writ petitions were allowed with no order as to costs, and connected miscellaneous petitions were closed.

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