GST ON POST SUPPLY DISCOUNT

[tejas kulkarni]

one of my automobile dealer has received commercial credit note in form of performance incentive/ target incentive.Now A.O. is charging output Gst on commercial credit note treating it post supply discount without any agreement with company.

In reply, I offered him latest judgement of Hon. madras high court in case of M/s Supreme Paradise - 2024 (2) TMI 351 - MADRAS HIGH COURT where it is clearly mentioned that Unless discount is offered on acocunt of subsidy, it can not form of Transaction value. I also quoted circular No 92/11/2019 where it is clarified that no tax on commercial credit note will be charged.

But A.O. denied the submission and charged tax. Pls guide.

[KASTURI SETHI]

This case is fit for filing appeal. The factum of, 'intermediary' cannot be a hurdle in getting fair justice. An intermediary/agent/broker always works for and on behalf of the principal (owner). An intermediary is independently registered and pays GST.

You will have to work hard to trace out case laws pertaining to the Contract Act in your favour. Indian Contract Act is applicable to all acts. A purchase order is a contract. There is no doubt to this effect at all. You need the art of drafting and art of presentation in the Appellate Tribunal. So you need the services of an expert.

AI Summary

GST treatment of commercial credit notes requires evidentiary proof to avoid output tax as post supply discounts
Commercial credit notes given as performance or target incentives are not automatically taxable as post supply discounts; taxability depends on whether they alter the transaction value or arise from subsidy/discount terms. The onus is on the person claiming non taxability to prove outward tax liability was not reduced, using books of account, documentary evidence (including purchase orders or pre sale terms), and persuasive rulings or circular guidance. Practical measures include evidencing absence of discount terms, accounting entries showing no change in consideration, issuing tax invoices if recipient can claim input credit, and litigating audit assessments with targeted evidence.