2026-VIL-329-GSTAT-AGR
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SGST Tribunal

GST - Treatment of discounts or incentives received from supplier and disclosed as adjustment in turnover in reconciliation statement of recipient - Respondent disclosed an amount in the adjustment column of the reconciliation statement in GSTR-9C, explained as incentives and discounts received from its supplier and as already deposited through Form GST DRC-03. The adjudicating authority initiated proceedings under Section 74 alleging that the Respondent was availing the benefit of the same deposit twice - The FAA decided the appeal in favour of the Respondent - Whether the demand of output tax can be sustained on the basis of the amount disclosed in the reconciliation statement without examining the nature and tax treatment of the discounts - HELD - Section 15(3) of the CGST Act, 2017 governs the value of the taxable supply of the supplier and prescribes the conditions for excluding a discount from that value, and not from the taxable supply of the recipient. Receipt of a discount does not by itself entitle the recipient to reduce its own outward taxable turnover by the same amount. The tax treatment must be determined with reference to the nature of the transaction, the invoices and credit notes, and the treatment adopted by the supplier and the recipient in their returns - The adjudicating authority must ascertain whether the supplier issued credit notes recorded in its GSTR-1, whether the discounts were linked to invoices under an agreement entered into at or before the supply, whether the supplier reduced its taxable value, and whether the recipient is required to reverse ITC. If the supplier did not reduce its taxable value or output tax liability, reversal of ITC by the recipient is not warranted. The adjudicating authority must also verify whether the recipient actually reduced its outward taxable turnover or output tax liability in its returns, and if it did not, mere disclosure of the amount in the reconciliation statement does not justify a demand of output tax - The orders of the FAA and the adjudicating authority passed without adequate investigation are set aside, and the matter is remanded for fresh order – The appeal is allowed by remand
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