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ITC can be availed on full GST charged on undiscounted supply invoice of goods or services issued by supplier
MRF Ltd.  108 taxmann.com 65 (AAAR – TAMILNADU)
The applicant intends to enter into an agreement with M/S C2FO India LLP for setting-up an interactive automated data exchange relating to sale and purchase of goods and services between applicant and supplier. The supplier will offer a certain discount for an early payment of an invoice, however, the quantum of discount offered is not known at the time of supply of goods/services.
It has sought an advance ruling to determine whether the applicant can avail ITC of full GST charged on the undiscounted supply invoice or a proportionate reversal of the same is required in case of post purchase discount given by the supplier to it through the C2FO platform?
The Authority for Advance Ruling, Tamil Nadu ruled that the applicant can avail input tax credit only to the extent of the invoice value raised by the suppliers less the discounts as per C2FO software. The applicant has filed an appeal before Appellate Authority for Advance Ruling, Tamil Nadu.
The Appellate Authority for Advance Ruling, Tamil Nadu observed that as per the provisions of the CGST Act, 2017, value of supply shall not include any discount which is given before or at the time of supply if such discount has been recorded in the invoice. In case the discount is given after the supply where such discount is established as per agreement entered into at or before such supply and linked to relevant invoices and further ITC attributable to the discount has been reversed by the recipient, then also discount is excluded from the value of supply. In this case, none of these conditions are satisfied, therefore, the transaction value shall be the value on which GST has been charged.
The Appellate Authority for Advance Ruling, Tamil Nadu has set aside the order of AAR and held that applicant can avail the ITC of the full GST charged on the undiscounted supply invoice of goods/ services by their suppliers. A proportionate reversal of the credit is not required to be done by it in case of a post purchase discount given by the supplier through the C2FO platform on the condition that GST paid by it for the said goods/service is not reversed or reimbursed or re-credited to it in any manner by the supplier after the credit has been availed by applicant.