Allowability of CST along with quanrity

[ranjit ronald]

Dt.14.08.09 Sir, We are a chemical manufacturing company, and allowing quantity discount in subsequent month by way of credit notes. While crediting the quantity discount, CST is not allowing to the customers. Some of our customers are requesting us to allow proportionate CST towards quantity discount. Please advise us whether CST is allowable along with quantity discount as per CST rules. RANJIT RONALD C.R. ASST. ACCOUNTS OFFICER THE KERALA MINERALS AND METALS LTD., KOLLAM, KERALA STATE

[Rama Krishana]

What i believe that sales tax / vat or CST is payable on the value of sale. The value of sale can be arrived at after reducing the amount of quantity discount. If quantity discount is the pre-condition of sale, you can allow the same by way of charging CST on the reduced price. Where tax has already been paid, you may file the revised return to claim the benefit and adjust the tax with subsequent liability.

AI Summary

Quantity discount treatment: CST should be computed on the reduced sale value when discount is a pre condition of sale.
CST is payable on the value of sale, which may be reduced by a quantity discount when that discount is a pre condition of the transaction; compute CST on the net price after the discount and document the adjustment by credit notes. If tax was already paid on the higher value, file a revised return or make permitted statutory adjustments to claim the benefit and adjust the tax against subsequent liability.