"MAHARASHTRA AUTHORITY FOR ADVANCE RULING GST Bhavan, Room No.107, Ist floor, B-Wing, Old Building, Mazgaon, Mumbai — 400010. (Constituted under Section 96 of the Maharashtra Goods and Services Tax Act, 2017) BEFORE THE BENCH OF (1) Ms. P.Vinitha Sekhar, Addl. Commissioner of Central Tax, (Member) (2) Shri A. A. Chahure, Joint Commissioner of State Tax, (Member) GSTIN Number, if any/ User-id 27AAACC1645G1ZZ Legal Name of Applicant M/s. CEAT Limited Registered Address/Address | 3\" Floor, RPG House, 463, Dr. Annie Beasant Road, provided while obtaining user id Worli, Mumbai 40030 Details of application : GST-ARA, Application No. 41 Dated 28.08.2019 Concerned officer _ MUM-VAT-E-614, LTU-002, Mumbai Nature of activity(s) (proposed/present) in respect of which advance ruling sought A_| Category Factory/Warehouse/Deport B_| Description (in brief) Issue of credit note for post-sale discounts. Issue/s on which advance ruling | (iii) Determination of time and value of supply of goods required or services or both Question(s) on which advance | As reproduced in para 01 of the Proceedings below. ruling is required PROCEEDINGS tion 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra h Goods and Services Tax Act, 2017) sent application has been filed under Section 97 of the Central Goods and Services and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as ct and MGST Act” respectively | by M/s. CEAT Limited, the applicant, seeking an ruling in respect of the following questions. Des Whether dealer is required to reverse input tax credit proportionate to the reduction in the value of supply? 2 Whether the applicant can issue commercial credit note to its dealers for post sale discounts without charging GST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is 1 specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression “GST Act’ would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION — AS PER THE APPLICANT The submissions made by the applicant is as under:- 21 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 various 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. De: Applicant offers various kinds of discounts such as product discounts, 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 r / year end and are passed on by way of credit notes. 15(3) provides that the value of supply shall not include any discount provided that Wi conditions are followed as stipulated under the provision, as follows; 8) 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 entered into at or before the time of such supply and specifically 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 reversed by the recipient of the supply.\" 25 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 reasons 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, ete. Hence applicant intends to issue commercial credit notes to its dealers with the value of supply to be full undiscounted value of such commercial 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 entitled to take full ITC charged on the goods or services or both. The recipients/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 Authority for Advance Ruling in MRF Tyres reported at 2019-TIOL-61-AAAR-GST as well as on the Circular credit in case of a post-sale discount provided by the applicant. Accordingly, the applicant can issue commercial credit notes without the GST component to its dealers. 2.12 Applicant has also cited Circular No. 92/11/2019-GST dated 07.03.2019 to state that in cases where the conditions under section 15(3)(b)(ii) cannot be satisfied, applicant can issue commercial credit notes for the same. 2.13 Further submissions states that once the applicant has not claimed any refund or deduction in the value of the tax payable, the entire tax has been paid to the exchequer. Therefore, there is no revenue implication in the instant case. 03. 04. 5.2 5.2.1 CONTENTION — AS PER THE JURISDICTIONAL OFFICER: In reply to the first question, the jurisdictional officer has submitted that the applicant is not fulfilling the condition as per séction 15(3)(b)(ii) because there being several dealers to whom post-sales discounts are offered, it is not possible for the applicant to ascertain whether ITC as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. In reply to the second question the jurisdictional officer has submitted that the applicant can issue the commercial note to his customers. HEARING Preliminary hearing in the matter was held on 17.12.2019. Sh. Bharat Raichandani, Advocate along with Sh. V. R. Inamdar, Sr. Manager appeared, and requested for admission of the application. Jurisdictional Officer Sh. R.R. Pednekar, Dy. Commr. of S.T.(E-614), LTU-2, Mumbai also appeared and made written submissions. e application was admitted and called for final hearing on 06.02.2020. Sh. Bharat ndani, Advocate along with Sh. V. R. Inamdar, Sr. Manager, appeared, made oral and Grktten submissions. Jurisdictional Officer Sh. R.R. Pednekar, Dy. Comm. of S.T.(E- ie 614), LTU-2, Mumbai also appeared. We heard both the sides. ‘ OBSERVATIONS AND FINDINGS: We have gone through the facts of the case, documents on record and submissions made by the applicant as well as the jurisdictional office. We find that applicant is registered person under GST Act. The first query of the applicant is:-Whether their dealer is required to reverse input tax credit proportionate to the reduction in the value of supply?.” This authority is governed by the provisions of Chapter XVII of CGST ACT & the relevant Sections 95 to 98, 102, 103, 104 and 105. As per Section 95, the term ‘advance ruling’ means a decision provided by this authority to the applicant on matters or questions specified in Section 97(2), in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. As per provision of Section 95 of CGST ACT, this authority can give a ruling