AI Drafter 
TaxTMI 
TaxTMI 
2021 (8) TMI 494
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....y further tax liability to the applicant on the discount received through credit notes issued by the M/s. Hindustan Unilever Ltd., (First Supplier)? 2. In the light of the 1st proviso to Section 34 of CGST Act, 2017, is there any tax liability on the applicant for the discount received on the basis of credit notes issued by the First Supplier? 3. Whether the essence of the advance ruling given by the Hon'ble Kerala Authority for Advance Ruling in M/s. Santhosh Distributors (KER/ 60/ 2019 dtd.16-09-2019), is applicable to this applicant with respect to the credit notes given after supply? 4. Whether the applicant can follow the essence of the same advance ruling issued by this Hon'ble Kerala Authority for Advance Ruling? 5. If the first supplier issued credit notes showing GST and the applicant treated it as commercial credit notes, what are the consequences of such transactions? 6. As per Sec.15 (3) of the CGST Act, the value of taxable supply does not include discount. In this case, the value taken by the applicant is the invoice value prior to the discount. Is there any error in such procedure? 7. If any error has occu....
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....s leads to an appearance of mismatch in GSTR 2A of the Applicant. In view of the above factual situation, the Applicant's primary query is whether there is any tax liability on the Applicant, on account of the discount received under the credit notes issued by the Original Supplier. 4.3. In view of the proviso to Section 34(2) of the CGST Act, 2017, and Section 43 (3), 43(5), 43 (7) and 43 (10) of the CGST Act, 2017, so long as the applicant does not declare in their return the tax element attached with the credit notes, then the applicant is not liable for the tax element of such credit notes. The Applicant has treated the credit notes as commercial credit notes only, and has not recorded the same in their returns. Therefore, by operation of Section 43 of the CGST Act, the Original Supplier is not eligible to reduce their Output Tax Liability citing the credit notes issued to the Applicant. Further, the discount provided by the Original Supplier to the Applicant also does not fall under any category mentioned under Section 15(3) of CGST Act because the discount is not included in the Invoice, the discount is not given as per agreement or specifically linked to any invoices,....
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.... The matter was examined in detail. The issue to be decided are mainly as follows; (i) the tax liability of the applicant on the discount received through credit notes issued by the M/s. Hindustan Unilever Ltd; (ii) Whether the ruling given by this authority in the application of M/s. Santhosh Distributors [KER/60/2019 dated 16-09-2019] is applicable to them and whether they can follow the ruling; (iii) Whether GST credit notes issued by the supplier can be treated as commercial credit notes by the applicant; (iv) Whether there is any error in the procedure adopted by them by treating the invoice value prior to discount as the taxable value with reference to the provisions of Section 15 (3) of the CGST Act; (v) the steps to be taken for rectification of errors; if any regarding treatment of discount in the monthly returns filed by them for the years 2017-18 and 2018-19 and whether there is any provision in the GST laws to issue notice to the applicant alleging mismatch between the tax payment in Form 3B under CGST Rules and the GSTR 2A of the applicant, with respect to discount and if such provision exists, what are the steps to be taken....
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....sub-section (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. (2) The advance ruling referred to in sub-section (1) shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 7.6. On a combined reading of the definition of the terms, advance ruling, applicant and the above provisions governing advance ruling under the CGST Act it is evident that an applicant can make an application for advance ruling if the following conditions are satisfied; (1) the applicant is either registered under GST law or is desirous of obtaining registration; (2) the matter or question pertains to any issue specified in Section 97 (2); (3) such a transaction is being undertaken or proposed to be undertaken by the applicant and the advance ruling is binding only on the applicant and the jurisdictional officer of the applicant. 8. In the instant case the 1st and 2nd question raised is regarding the tax liability on the discount received by the applicant through the credit notes issued by the supplier as per provisions of Section 34 o....
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....respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient one or more debit notes for supplies made in a financial year containing such particulars as may be prescribed. (4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed. Explanation: -For the purposes of this Act, the expression "debit note" shall include a supplementary invoice." 8.1. Thus, sub-section (3) of Section 15 of the CGST Act clearly specifies the circumstances under which and the conditions subject to which any discount can be deducted / excluded for determining the taxable value of a supply. From the facts as stated by the applicant it is seen that the discount received through credit note is a post - supply discount. However, the applicant has not stated whether such discount is established in terms of an agreement entered into at or before the time of such supply. The applicant has neithe....