Page 191 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 557
corresponding transaction vouchers exhibiting the actual taxable
value of the goods equal to that recorded in the corresponding in-
voices and GST thereon, which is also equal to the GST amounts
mentioned in the corresponding Tax Invoices, they have strenuous-
ly emphasized that they are not paying less taxable amount or GST
thereon to their suppliers in the L.D. cases. Further, they empha-
sized that they are maintaining separate accounts for Liquidation
Damages, whose accounting code is different from those used for
recording the taxable amount, CGST amount and SGST amount or
IGST amount, as the case may be. Thus, they strive to contend that
the Deduction of L.D. is separate transactional event from the re-
ceipt of the goods and payment made in respect thereof, after de-
ducting L.D. from the dues of the respective suppliers.
110. As regards the observation of the AAR inasmuch as the lesser
payment being made to the suppliers would result in lesser payment of GST by
the concerned suppliers, it was submitted by the Appellant that the taxable value
of goods/services does not change due to L.D deduction. They inter alia submit-
ted that the supplier shall have to pay tax on the entire taxable amount and not
just only on the amount after deduction of L.D. They have corroborated this con-
tention with the copies of GSTR-2A of the Appellant, wherein the above men-
tioned two sample invoices are being reflected. They further submitted that no
credit notes have been raised by the supplier in respect of these two invoices
which means that even the supplier understands that the taxable amount does
not decrease due to deduction of L.D; and that the supplier does not intend to
pay lesser amount to the GST Department by issuing credit notes in respect of
deduction of L.D from such invoices.
111. On perusal of the submissions and documentary evidences put
forth by the Appellant, it is amply revealed that deduction of Liquidation Dam-
ages from the dues of the suppliers on account of delayed delivery of goods or
services has no bearing, whatsoever, on the actual taxable amount and GST levi-
able thereon mentioned in the tax invoices, as the transaction of L.D. is separate
from the transaction of the receipt of the goods or services. It is manifest from the
two separate accounting codes, maintained by the Appellant, one for the receipt
of goods and another for deduction of L.D. from the suppliers’ due, that taxable
value of the goods or services even in L.D. cases are being recorded in their re-
spective accounts having its value equal to those mentioned in the tax invoices
raised by the suppliers of the Appellant. The transaction related to L.D. is being
recorded in separate accounting code. Maintenance of such accounting codes by
the Appellant clearly shows that the Appellant is paying the actual taxable
amount and GST thereon to its suppliers, as mentioned in the tax invoices raised
by its suppliers. Further, the reflection of the illustrated sample invoices in the
GSTR-2A of the Appellant further substantiates the Appellant’s claim that the
suppliers are also aware of their liability to pay the actual GST and not the lesser
amount of GST are being paid by the suppliers, even in the cases where there is
deduction of liquidation damages from the payment made to such suppliers.
112. Thus, in view of the above, it is observed that the Appellant was
rightful in challenging the ruling pronounced by AAR in this regard, and accord-
ingly, they are not required to reverse the ITC on account of the deduction of
L.D. from the payment made to the suppliers.
113. Now let us examine the final issue of the appeal, which had been
GST LAW TIMES  23rd July 2020  191