Held: The price of the products supplied by the applicant is determined by the supplier/principal company and the applicant has no control on the price of the products. Therefore, the additional discount given by the supplier through the applicant; which is reimbursed to the applicant is to offer a special reduced price by the distributor / applicant to the customers and hence the amount represent consideration paid by the supplier of goods / principal company to the distributor / applicant for supply of goods by the distributor / applicant to the customer. Therefore, this additional discount reimbursed by the supplier of goods / principal company to the distributor / applicant is liable to be added to the consideration payable by the customer to the distributor / applicant to waive at the value of supply under Section 15 of the CGST / SGST Act at the hands of the distributor / applicant. The supplier of goods / principal company issuing the commercial credit note is not eligible to reduce his original tax liability and hence the recipient / applicant will not be liable to reverse the ITC attributable to the commercial credit notes received by him from the supplier. The applicant is liable to pay GST at the applicable rate on the amount received as reimbursement of discount / rebate from the principal company (AAR No. KER/60/2019 dt. 16th September, 2019)
Santhosh Distributors. (2020- AIFTP Times- January -P-11 )( ker) (AAR)
GST – AAR- Kerala .
“Whether the discount provided by the Principal Company to their dealers through the applicant is taxable under the GST laws? Whether the amount shown in the Commercial Credit note issued to the applicant by the Principal Company attracts proportionate reversal of input tax credit? Is there any tax liability under GST laws on the applicant for the amount received as reimbursement of discount or rebate provided by the Principal Company as per agreement between the Principal Company and their dealers and also an agreement between the principal and distributors? “