vat
Querist :
Anonymous
(Querist) 15 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 . the figures are opening stock - 332214 purchase - 2920201.95 less credit note - 242428, add debit note - 1854 =net purchase in trading account - 2679627.25 sales - 1912953 closing stock - 1189242.27 GP - 90354.02 what to do.
soumitra basu
(Expert) 15 January 2010
You have done the correct thing. It has been held by the Hon'ble Supreme Court that the Departmental Authorities can not compel the assessee to have maximum profit. Though, it have to seen whether in the credit note the Company has reversed its back already taken from its Sales which are your purchase. If so then naturally you have to pay VAT otherwise no need to pay. Othersie, if it is quantity, Turnover Discount then you need not have to pay the tax. It has been well settled that Discount through Credit Note shall not reduce the sell figure. The department has to take tax only on the actual sale but not on deemed sale as per the discretion of the STO.
