VETTATHIL AGENCIES Vs. COMMERCIAL TAX OFFICER, CHERTHALA

JUDGEMENT

(1.) Since the issues involved in these writ petitions are the same, they are taken up for consideration together and disposed by this common judgment.

(2.) The issue involved in these writ petitions is with regard to the availment of input tax credit by dealers, of the tax paid by them at the time of purchase of goods from their suppliers. An incidental issue that arises for consideration is whether amounts offered by way of discount through credit notes issued by the supplier of the goods, at a point in time subsequent to the sale of the goods to the petitioners, can be added to the sales turnover of the petitioners' by invoking the provisions of explanation VII to the definition of turnover under S.2(lii) of the KVAT Act. In WP (C) 19976/2012, it is the first issue that comes up for consideration and in all the other writ petitions, it is the second incidental issue that arises for consideration.

(3.) The brief facts necessary for a disposal of the writ petitions are as follows: The petitioners are all registered dealers under the KVAT Act trading in the commodity, Cement. The petitioners purchase Cement from various suppliers / manufacturers and, at the time of purchase of the Cement, they pay the price indicated in the invoice raised on them by the suppliers. Immediately on payment of the price inclusive of tax, indicated in the invoice raised by the supplier, the petitioners avail input tax credit of the tax so paid. In the course of trade, the petitioners also receive certain amounts, by way of discount from the supplier of the goods. The said discount is often given to them by way of credit notes raised on them, and the said amount is not claimed by way of discount by the supplier, while filing returns before his assessing authority, for the purposes of completion of his assessment under the KVAT Act or the corresponding State enactment in his State. The petitioner subsequently sells the Cement purchased by him from his supplier, at prices, which are sometimes lower than the price at which he purchased the goods, but invariably at a price higher than his purchase price, as reduced by the discount amount received by him, by way of credit notes. The assessment authorities under the KVAT Act, proceeded to issue notices to the petitioners, under S.25(1) of the KVAT Act, raising demands on the following two contentions, namely,