VAT
Querist :
Anonymous
(Querist) 09 January 2010
This query is : Resolved
the applicant is an automotive dealer and company issued credit notes according to sale, which is only income, the applicant deduct the credit notes in trading account from purchase and derive gross profit.the applicant is charcged under 12.5% VAT.the applicant deposit vat to the price of sale.now the sto is asking to deposit the vat @12.5% on amount of credit notes arguing that if the figure of credit notes removed from trading account the firm will come in loss which is true as said earlier in this trade the only frofit is from credit notes .what to do.
soumitra basu
(Expert) 13 January 2010
It is immaterial whether there is Gross Profit or Gross Loss in Trading Account. The STO is not competent person for that. It is to be seen whether the person has paid sales tax on the full amount of sales after deducting input tax credit on the purchases. It is already settled that the discount issued by credit notes shall not reduce the sale price for the purpose of taxation. Similarly the same discount cannnot reduce the purchase. There is no estoppel from the act. Tax has to be charged on the basis of sales less input tax. Gross Profit or Gross Loss is other issue which cannot be decided by the STO.
