TaxTMI 
TaxTMI 
2015 (11) TMI 1654
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....n form VAT -100 before the Assessing Authority i.e. the 3rd respondent herein. On assessment the 3rd respondent arrived at a conclusion that the appellant has claimed exemption in respect of discounts granted subsequent to the issuance of tax invoice and concluded that the same is not in consonance with the provisions of Rule 3(2)(c) of the KVAT Rules 2005 (hereinafter referred to as 'the Rules 2005' for brevity and convenience). As a consequence of the above conclusion, the Assessing Authority passed an order under Section 39(1) of the KVAT Act (hereinafter referred to as 'the Act' for brevity and convenience) disallowing the discount paid subsequent to the issue of tax invoices and levied tax and penalty amounting to Rs. 45,128/- by order dated 20.10.2007. 3. The appellant being aggrieved, unsuccessfully appealed to the First Appellate Authority which dismissed the appeal by its order dated 22.4.2008. It is contended that thereafter the appellant once again filed a rectification appeal before the very same First Appellate Authority and the said rectification application came to be allowed by order dt. 13.3.2009. 4. The first respondent exercising suo motu powers appears to ....
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....of the assessee or ought to be evidenced by the terms of any contract of agreement and it must also be demonstrated by the assessee that the purchaser had paid the originally charged sum less the discount. It is the finding of the First Appellate Authority, that in the case of the assessee, the buyers have originally paid tax on the entire amount including the tax component, and at the end of the year refunds, in the form of additional discounts, cash discounts, incentives etc. has been given by the assessee in the form of credit notes and this methodology/practice adopted by the assessee is not in consonance with law and the said ground the appeal came to be rejected by order 22.4.2008. 8. After the lapse of nearly 6 months from the passing of the order it is stated that the counsel for the assessee is said to have appeared and pleaded that the tax has to be levied on the real and actual value of sale and not on the notional value. Apart from that it has been additionally argued for the first time that whenever their sellers allow certain discounts, additional discount, incentives etc., the same were passed on to their local retailers by issue of credit notes and that too withi....
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....y in his own words as follows :- "In view of the new dimensions that emerges now the appeal order dt.22.4.2008 appears to be an order passed with mistaken notion and resultant decision a mistake appearing on records" 11. The first appellate authority has virtually admitted that he has reviewed his own order. The issue whether it is permissible in law and the Appellate Authority is competent to review is a matter that does not fall for consideration by this Court and this court need not dwell upon the same. The First Appellate Authority after reviewing was pleased to set aside the discount disallowed and invoking the provisions of Sub Section (2) of Section 72 ordered penalty of Rs. 3,881/- to be deleted exercising his powers of rectification under Section 69 of the Act. 12. The First Appellate Authority while passing the rectification order has no where referred to the factual material placed before the Authority. What were the documents examined by him? Whether the tax invoices as mandated under Rules 27 and 29 of the Rules were looked into by him? Whether credit and debit notes as mandated under Rule 31 of the Rules were looked into by him. It is also not forthcomi....
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....) Whether it is permissible for the assessee to show the discount given by a separate credit not subsequently and claim deduction even though the said discount is not shown in the tax invoice or sale bill? After hearing, the additional substantial question of law has been framed i.e. 'Whether it is permissible for the Appellate Authority or the Tribunal to render a finding merely on the broad principles of law and precedents without adverting to the factual aspects and material particulars of a case? 15. The counsel for the petitioner has relied on catena of judgments rendered by this Court in STRP No.119/2008 in the case of State of Karnataka - vs - Reliance Industries Ltd; In STA No.71/2010 between M/s.Pratham Motors Pvt.Ltd - vs - Addl. Commissioner of Commercial Taxes; STRP No.51/2009 and Civil Appeal Nos.2516-17/2012 rendered by the Hon'ble Apex Court in M/s.IFB Industries case. 16. The respondents also placed reliance on the judgment of this Hon'ble Court in STRP No.84/2009 & 71-76/2010. 17. Adverting to the first substantial question of law there cannot be any dispute that any judgment rendered by this Court cannot be treated lightly by the Subordinate A....
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....nd Rule 31 stipulates the particulars that ought to be revealed in a debit and credit note. Thus we conclude that the dealer is entitled to give further discounts even after the sale has been completed provided the discounts are the customary practice in the trade or otherwise known as trade discounts. It has to be demonstrated by the assessee that the further discounts, apart from the discounts in the tax invoice or sale bill already given, is pursuant to the terms and conditions of an agreement or contract between the seller and the registered dealer. For Eg. a contract may be entered into for providing further discounts in the event if the dealer achieved a particular target or exceeds a particular target. Thus to concise the same this Court is of the opinion that a discount is allowable under the tax invoice or sale bill. A further discount is also permissible by way of credit note and debit note subject to the condition it is demonstrated that the discounts are trade discounts or pursuant to a contract or agreement entered into between the seller and the dealer. The onus of proving the said fact is on the assessee and he ought to demonstrate that the discount given by him is i....