overinvoicing refund

[Devdas Kamath]

A capital goods item, is by ommission quoted high.The financial institution is funding the project.The seller receives the amount billed as per the high quotation both from the purchaser ( margin money ) anf the financier committment amount.The deal is concluded.

Now the purchaser points out the lacunae of high pricing and demands the refund be made to him .

question of law:

1) as per banking norms, since the financiers are involved, is it not inding on the seller to reimburse to the financier the amount so excess billed.If so kindly quote the relevant rule.

2) The excess amount so refunded to the purchaser, if in contravention of the banking rules, and made by credit/debit note,  would be deductable expense in the hands of the seller. quote relevant sectionapplicable.

3)The Sales tax (VAT) on the refunded amount , be it to the purchaser or the financier would be adjustable , if the same is done within the six month period.

Kindly enlighten

thks n rgds.

Devdas Kamath

AI Summary

Purchaser demands refund after overinvoicing; questions on seller's reimbursement obligations, VAT adjustments, and tax deductions under Section 37. A purchaser discovered overinvoicing in a capital goods transaction, where the seller received excess funds from both the purchaser and a financial institution. The purchaser now demands a refund. The legal questions raised include whether the seller is obligated to reimburse the financier according to banking norms, whether the refunded excess is a deductible expense for the seller, and if VAT adjustments can be made within six months. A Chartered Accountant suggests that a detailed analysis is needed to determine if a deduction under Section 37 of the Income Tax Act is applicable.