VAT
Querist :
Anonymous
(Querist) 24 March 2010
This query is : Resolved
THE APPLICANT IS A TYRE DEALER AND DEALS WITH APOLLO TYRE COMPANY WHO IS A MANUFACTURER.THE APOLLO COMPANY CHARGES ALL TYRES BILLED TO APPLICANT @12.5% AND THE APPLICANT SHOWS FULL PURCHASE IN PURCHASE ACCOUNT.THE APOLLO COMPANY GIVES CREDIT NOTES i.e TURNOVER DISCOUNT,TARGET DISCOUNT,PROMPT PAYMENT DISCOUNT e.t.c. THE APPLICANT WHILE PREPARING TRADING ACCOUNT DEDUCT CREDIT NOTES FROM PURCHASE TO DRAW GROSS PROFIT.HERE IT IS TO MENTIONED THAT THE GROSS PROFIT DRIVEN BY APPLICANT IS ONLY DUE TO CREDIT NOTES AS THERE IS NO OTHER INCOME IN TRADING ACCOUNT.NOW TO DISCUSS MORE DEEPLY IF APPLICANT PURCHASE A TYRE FROM COMPANY OF RS. 100,COMPANY GIVES CREDIT NOTES OF RS 5 PER TYRE,THE APPLICANT SOLD THAT TYRE AT THE RATE OF 95 OR 96 i.e DUE TO COMPETITION THE APPLICANT PROFIT WHICH APOLLO COMPANY GIVES HIM PASSES TO CUSTOMER.
AT THE TIME OF ASSESMENT OF CASE THE STO ORDERED TO ADD VAT @12.5% TO THE TOTAL VALUE OF CREDIT NOTES.
SINCE THE APPLICANT PAID VAT @12.5% ON TOTAL PURCHASE IN MY OPINION IT IS WRONG TO ADD VAT ON CREDITNOTE, BECAUSE THE APPLICANT HAD PAID VAT @12.5% ON REALISED SALE.
PLEASE HELP ME.
KINDLY LOOK-
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6694 OF 2008
(Arising out of SLP (C) No. 21538 of 2006)
AND
VAT on Goods Returned and Discount - Bombay Salestax, VAT, Servicetax, GST ArticlesBombay
Salestax, VAT, Servicetax, GST Articles
VAT on Goods Returned and Discount
VAT on Goods Returned and Discount
-N.T.Nirale, MA, MCom, LL.B. Advocate
Retd. Member-Judge, Maharastra Sales Tax Tribunal. Mumbai
CAN IT HELP ME.PLEASE HELP
soumitra basu
(Expert) 02 April 2010
In my opinion:
1. Since the Company paid the Tax on Total Purchases, he should get input credit of the amount paid by him as VAT.
2. In the definition of Sale/Transfer no where it has been mentioned that Turnover Discount allowed by the manufacturer should be treated as Sale.
3. As held by the Supreme Court, the law should be read in plain reading no import or addition of the word is permissible.
4. Since the Company did not get the claim of reducing sales by Credit Notes allowed to its dealer, the dealers should not be also be held responsible to pay tax on the credit notes.
5. Similarly, since the dealer is also paying Turnover Discount to its customer, the STO should also allowed the dealer to reduce its sales by the Discount.
6. It is already settled that no Tax shall be levied on the Turnover Discount.
7. The Revenue cannot demand double tax i.e. one side not allowing the manufacturer to reduce his sale by allowing credit notes and other side by charging tax on the Credit Notes received by the dealer. The department can not blow both hot and cold.
