Tvl. Shivam Steels Vs Assistant Commissioner (ST)(FAC) (Madras High Court)
In the case of Tvl. Shivam Steels vs. Assistant Commissioner (ST) (FAC) heard by the Madras High Court, the petitioner contested the original order dated March 12, 2024, specifically concerning defect number 3. The case revolves around a GST demand related to post-sale discounts and the consequent reversal of Input Tax Credit (ITC).
The petitioner received a show cause notice on January 12, 2024, addressing six defects. In response, the petitioner provided explanations on January 22, 2024, and February 14, 2024. The dispute centers on the reversal of ITC for credit notes issued by the supplier, with the petitioner arguing that these credit notes were financial in nature and did not meet the conditions outlined in Section 15(3) of the GST statutes. According to the petitioner, the value of supply should not include discounts unless specific conditions are met, which were not satisfied in this case. The petitioner also referred to Circular No.92/11/2019-GST to support their argument that they were not liable for ITC reversal for financial credit notes.
The learned counsel for the petitioner argued that the impugned order wrongly construed the discount offered by the supplier as a service provided by the purchaser to the supplier. This misinterpretation led to the erroneous conclusion that the petitioner provided a service by increasing the supplier’s sales volume, thus benefiting the supplier’s market position and goodwill. The counsel for the petitioner emphasized that this interpretation contradicts GST principles, warranting judicial intervention.
