Page 181 - GSTL_6th August 2020_Vol 39_Part 1

2020 ] IN RE : CEAT LTD. 107
2. Facts and contention - As per the applicant
The submissions made by the applicant is as under :-
2.1 CEAT Limited (hereinafter referred to as “applicant”) is engaged in
the manufacture and sale of tyre, tubes and flaps. The said goods are sold to var-
ious customers viz. dealers/distributors for their subsequent sale, Original
Equipment Manufacturers like Tata Motors, Maruti, etc., Institutional customers,
Government department and defence, who in turn sell to retailers/customers
and many of whom are end users as well.
2.2 Applicant offers various kinds of discounts such as product dis-
counts, cash discounts and post-sale discounts to its dealers. Such discounts are
known to the dealers before sale of the said goods. The recipient dealers of such
discounts makes the payment to applicant equal to invoice value minus post sale
discount.
2.3 The post-sale discounts such as turnover discount etc. are known at
the end of the quarter half year/year end and are passed on by way of credit
notes.
2.4 Section 15(3) provides that the value of supply shall not include any
discount provided that the two conditions are followed as stipulated under the
provision, as follows;
“(3) The value of the supply shall not include any discount which is given
(a) Before or at the time of the supply if such discount has been
duly recorded in the invoice issued in respect of such supply,
and
(b) After the supply has been effected, if -
(i) such discount is established in terms of an agreement en-
tered into at or before the time of such supply and specif-
ically linked to relevant invoices; and
(ii) Input tax credit as is attributable to the discount on the
basis of document issued by the supplier has been re-
versed by the recipient of the supply.”
2.5 In cases of post-sale discounts, it is not possible for the applicant to
satisfy to the condition as stipulated under Section 15(3)(b)(ii), for various rea-
sons like; dealers may not be registered under GST Act and hence, not entitled
for such credit; there may be end customers who may also not be entitled for
such credit, etc. Hence applicant intends to issue commercial credit notes to its
dealers with the value of supply to be full undiscounted value of such commer-
cial credit note.
2.6 Therefore, applicant want to know whether their dealers/customers
are eligible to take ITC on undiscounted value, when GST is paid on full value by
supplier and credit note does not include GST.
2.7 Applicant has submitted that on a conjoint reading of Sections 15
and 16 of the CGST Act, 2017, one can conclude that a registered person is enti-
tled to take full ITC charged on the goods or services or both. The recipi-
ents/dealers have reimbursed the GST charged on the undiscounted transaction
value at the time of supply and in circumstances where the GST charged and
paid has not been refunded/reversed on whole or in part, the credit availed need
not be reversed. Accordingly, the recipient will not be required to reverse the
input tax credit.
2.8 Applicant has placed reliance on the decision of Appellate Authori-
GST LAW TIMES  6th August 2020  181