TaxTMI 
TaxTMI 
2015 (12) TMI 1867
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....ved in these writ petitions is with regard to the availment of input tax credit by dealers, of the tax paid by them at the time of purchase of goods from their suppliers. An incidental issue that arises for consideration is whether amounts offered by way of discount through credit notes issued by the supplier of the goods, at a point in time subsequent to the sale of the goods to the petitioners, can be added to the sales turnover of the petitioners' by invoking the provisions of explanation VII to the definition of turnover under Section 2(iii) of the KVAT Act. In WP (C) 19976/2012, it is the first issue that comes up for consideration and in all the other writ petitions, it is the second incidental issue that arises for consideration.....
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.... paid tax on the Cement purchased by him from his supplier, at a price lower than his purchase price, the petitioner would have to reverse the input tax credit, which he had availed at the time of receipt of the goods, from the supplier. ii) Insofar as the petitioner had sold the Cement purchased by him from the supplier at a price lower than the purchase price indicated in the invoice of the supplier, the discount amount subsequently received by the petitioner by way of credit notes, would have to be added to the sales turnover of the petitioner in accordance with Explanation VII to Section 2(iii)." 3. Pursuant to notices issued to the petitioners in many of the cases, assessment orders were also passed, confirming the proposals in the ....
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....time when he sells the product. A variation of the input tax credit availed by him is called for only in a situation where, it is found that the tax paid by the supplier of the goods, of which credit was taken by the petitioner as input tax credit, is subsequently reduced on account of a refund granted to the supplier, of the tax initially paid by him. It follows that, in the absence of any claim for refund of tax paid by the supplier, the input tax claimed by the petitioners cannot be varied or modified, save in the situations mentioned in Section 11 of the KVAT Act, such as, for instance, where the goods in question are sold at a price lower than that at which they were purchased or when the goods are sold at a subsidised rate. 6. In the....
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....roportionate to the discount subsequently received by them from their suppliers. The assessing authority would have to first ascertain the sale price of the product in the hands of the petitioners, and determine the output tax paid by the petitioners. If, thereafter, it is found that the output tax paid by the petitioner is less than the input tax that he has taken credit of, then the appropriate course of action would be to direct the petitioners to restrict the input tax credit to the extent provided in the second proviso to Section 11(3) of the KVAT Act. 9. Secondly, if the discount amounts received by the petitioners from their suppliers, can be demonstrated to be amounts received by them towards balance of the sale price of the goods,....