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.

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.