The additional discount given by the distributor to the appellant is a consideration to offer the reduced price in order to augment the sales. This additional discount squarely falls under the definition of the term “consideration” as specified under Section 2(31) of the CGST/SGST Act, therefore liable to GST.
Appellate Authority for Advance Ruling — Tax liability on amount of reimbursement of discount and rebate – The appellant is an authorized distributor of M/s. Castrol India Ltd. for the supply of Castrol brand Industrial and automotive lubricants bearing HSN code 2710. The applicant sought an advance ruling as to whether the discount provided by the Principal Company to their dealers through the appellants attracts any tax under the GST Laws; whether the amount shown in the Commercial Credit not issued to the appellant by the Principal Company attracts proportionate reversal of ITC; is there any tax liability under GST laws on the appellant for the amount received as reimbursement of discount or rebate provided by the Principal Company as per written agreement between the Principal Company and their dealers and also an agreement between the principal and distributors. The Authority for Advance Ruling Kerala on 16/9/2019 ruled that the applicant/distributor is eligible to avail ITC shown in the inward invoice received by him from the supplier of goods/principal Company. The prices of the products supplied by the applicant are determined by the supplier/principal company and the additional discount given by the supplier through the applicant, which is reimbursed to the applicant is to offer a special reduced price by the distributor/applicant to the customers and hence the amount represent consideration paid by the supplier of goods/principal company to the distributor/applicant for supply of goods by the distributor/applicant to the customer. Therefore, this additional discount reimbursed by the supplier of goods/principal company to the distributor/applicant is liable to be added to the consideration payable by the customer to the distributor/applicant to arrive at the value of supply under Section 15 of the Act. The supplier of goods/principal company issuing the commercial credit note is not eligible to reduce his original tax liability and hence the recipient/applicant will not be liable to reverse the ITC attributable to the commercial credit notes received by him from the supplier. The appellant is liable to pay GST at the applicable rate on the amount received as reimbursement of discount/rebate from the principal company.
Held that:- The Hon’ble Appellate Authority for Advance Ruling upheld the decision of the Advance Ruling Authority, Kerala.
The additional discount given by the distributor to the appellant is a consideration to offer the reduced price in order to augment the sales. This additional discount squarely falls under the definition of the term “consideration” as specified under Section 2(31) of the CGST/SGST Act, therefore liable to GST.
Appellate Authority for Advance Ruling — Tax liability on amount of reimbursement of discount and rebate – The appellant is an authorized distributor of M/s. Castrol India Ltd. for the supply of Castrol brand Industrial and automotive lubricants bearing HSN code 2710. The applicant sought an advance ruling as to whether the discount provided by the Principal Company to their dealers through the appellants attracts any tax under the GST Laws; whether the amount shown in the Commercial Credit not issued to the appellant by the Principal Company attracts proportionate reversal of ITC; is there any tax liability under GST laws on the appellant for the amount received as reimbursement of discount or rebate provided by the Principal Company as per written agreement between the Principal Company and their dealers and also an agreement between the principal and distributors. The Authority for Advance Ruling Kerala on 16/9/2019 ruled that the applicant/distributor is eligible to avail ITC shown in the inward invoice received by him from the supplier of goods/principal Company. The prices of the products supplied by the applicant are determined by the supplier/principal company and the additional discount given by the supplier through the applicant, which is reimbursed to the applicant is to offer a special reduced price by the distributor/applicant to the customers and hence the amount represent consideration paid by the supplier of goods/principal company to the distributor/applicant for supply of goods by the distributor/applicant to the customer. Therefore, this additional discount reimbursed by the supplier of goods/principal company to the distributor/applicant is liable to be added to the consideration payable by the customer to the distributor/applicant to arrive at the value of supply under Section 15 of the Act. The supplier of goods/principal company issuing the commercial credit note is not eligible to reduce his original tax liability and hence the recipient/applicant will not be liable to reverse the ITC attributable to the commercial credit notes received by him from the supplier. The appellant is liable to pay GST at the applicable rate on the amount received as reimbursement of discount/rebate from the principal company.
Held that:- The Hon’ble Appellate Authority for Advance Ruling upheld the decision of the Advance Ruling Authority, Kerala.