TaxTMI 
TaxTMI 
2020 (2) TMI 596
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....ice issued on 02.04.2014 wherein it has been stated that the Petitioner has received from the manufacturer a trade discount for a sum of Rs. 3,48,08,441/- which was to be treated as a value addition and hence proposed to assess it to tax at 12.5%. Accordingly, the notice proposed to demand a sum of Rs. 43,51,055/- as tax due from the Petitioner. 3. The Petitioner replied to the said notice vide a reply dated 17.04.2014 explaining that the discount offered by the manufacturer, cannot be added to the taxable turn over of the Petitioner for the sale effected to its buyers in the retail market. 4. It is the case of the Petitioner that at the time of personal hearing, the petitioner appeared and also produced relevant documents and prayed fo....
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....relevant portion of the circular which reads as follows:- "Notwithstanding-anything contained in this section, where any registered dealer has sold goods at price lesser than the price of the goods purchased by him, the amount of the Input Tax Credit over and above the output tax of those goods shall be reversed. The above subsection was introduced with effect from 19.08.2010. Later it was brought into force retrospectively from 01.01.2007 in TNVAT Act Special Provision Act, 2010. 2. The above facts have to be ensured by verifying the purchase and sale price per unit. 3. If the above two things are found in a business concern, the quantum of ITC which exceeds the output tax shall be reversed. According to Sec: 2(41) Explanati....
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....as follows:- "19. What transpires from the above case law is that the amounts paid by way of consideration by the purchaser to the seller of goods in pursuance of the contract of sale can legitimately be regarded as purchase price while calculating the turnover for the purposes of sales tax legislation. What can legitimately be brought to sales tax or purchase tax is the aggregation of the consideration for the transfer of property. All the payments should have been made pursuant to the contract of sale and not de hors it. Any amount paid as ex gratia payment or as an advance cannot be the component of the purchase price and therefore cannot legitimately be included in the turnover of the purchasing dealer. Whether one of the components ....
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....of sugarcane and as a part of the consideration for which the sugarcane was ultimately purchased by them". The court regarded this subsidy as a deferred payment and, therefore, includible in the taxable turnover. It is clear that this subsidy was paid pursuant to an agreement between the growers and the purchasers and the payment was made at the time of the sale. In the present case, however, there is no agreement between the appellant and the purchasers of fertilise for payment of any amount by the purchasers to the manufacturer in excess of the price fixed under the Fertiliser (Control) Order. Subsidy is paid to the appellant not by or on behalf of the purchasers, but is paid by the Government of India for different reasons and under its ....
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....its, it is not maintainable. 11. I have heard the learned counsel for the Petitioner and the learned Special Government Pleader for the Respondent. 12. I have considered the impugned order and the notices pursuant to which the impugned order came to be passed. There is no dispute that the Petitioner is a dealer in motor cars and had received trade discount from the manufacturer from whom it had purchased the cars for retail sales at its show rooms. The trade discount which has been offered by the dealer is an incentive given by the manufacturer based on the performance of the Petitioner in the retail market. The trade discount offered by the manufacturer to the Petitioner does not in any manner enhance the taxable value of the motor car....