A trader sells goods at a price which is less than the purchase cost of the same and thereby accumulates the ITC. He does this for achieving volume discount on purchases made by him. Such volume discounts are not subjected to GST as per AAR ruling in IN RE: M/S. KWALITY MOBIKES (P) LTD., 2019 (10) TMI 792 - AUTHORITY FOR ADVANCE RULING, KARNATAKA.
1. Can the trader carry forward such accumulated ITC and utilise the same for future GST liability? I guess there can not be a situation of refund since it does not fall under inverted duty structure.
2. Would this amount to subsidies directly linked to price as stated in Sec 15(2)(e).
Trader Can Carry Forward Input Tax Credit Despite Selling Below Cost; GST Not Applicable on Volume Discounts A trader sells goods below purchase cost to gain volume discounts, which are not subject to GST as per an AAR ruling. The trader queries whether accumulated Input Tax Credit (ITC) can be carried forward for future GST liabilities, noting that refunds are unlikely as this does not involve an inverted duty structure. Responses highlight that advance rulings are specific but can guide similar cases, and confirm that ITC can indeed be carried forward. It is noted that selling below cost is common due to COVID-19, despite concerns about covering expenses without a profit margin. (AI Summary)
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