Advance Ruling cannot be provided in the absence of necessary and requisite details

Last updated: 14 August 2021

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The Kerala Authority for Advance Ruling (AAR) has refused to provide a ruling in a case where the applicant sought clarification on tax liabilities related to discounts received via credit notes. The AAR found that the applicant failed to provide essential details about the discount agreement and the credit note itself. Furthermore, some of the questions posed by the applicant fell outside the AAR's jurisdiction under the CGST Act.

Court :
Kerala Authority for Advance Ruling (KAAR)

Brief :
The Hon’ble Kerala Authority for Advance Ruling ('AAR')noted from the facts submitted by the Applicant, it is seen that the discount received through credit note is a post supply discount. The applicant has not disclosed whether the discount is established through an agreement at or before the time of supply. Neither has the Applicant mentioned any details pertaining to the agreement nor the credit note in question.

Citation :
Advance Ruling No. KER/123/2021 dated May 31, 2021

In Shri Kottoor Mathew Jose Mathew, M/s. Jose Matthew and Co. [Advance Ruling No. KER/123/2021 dated May 31, 2021], Shri Kottoor Mathew Jose Mathew('the Applicant') has sought an advance ruling on the following issues:

Whether there lies any tax liability on the discount received through credit notes.
Consequences of treating credit notes after showing Goods and Services Tax ('GST') on commercial credit notes
Whether there lies any error in taking the value mentioned in the invoice without mentioning the discount
Steps to be taken if there has been such an error
Provision in GST laws in case of any mismatch in the value of tax payment made in GSTR 3B and GSTR 2A.

The Hon’ble Kerala Authority for Advance Ruling ('AAR')noted from the facts submitted by the Applicant, it is seen that the discount received through credit note is a post supply discount. The applicant has not disclosed whether the discount is established through an agreement at or before the time of supply. Neither has the Applicant mentioned any details pertaining to the agreement nor the credit note in question.

It further noted that some of these issues are not dealt under Section 97(2) of the Central Goods and Services Act, 2017 ('CGST Act'). With respect to the same, it stated that the Authority being a creature of statute has to function within its jurisdiction authority.

Therefore, the authority due to the issues not being covered under the relevant provisions and due to absence of necessary information, cannot issue any ruling in the said matter.

FAQ :

The Advance Ruling was denied because the applicant did not provide necessary and requisite details regarding the discount received through credit notes and the agreement establishing it.

The applicant failed to disclose whether the discount was agreed upon at or before the time of supply and did not provide details of the agreement or the credit note in question.

No, the Authority for Advance Ruling functions within its statutory jurisdiction and can only address issues covered under Section 97(2) of the CGST Act, 2017.

A post-supply discount is a discount that is provided after the initial supply of goods or services has taken place.

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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