2018 (11) TMI 1264 – AUTHORITY FOR ADVANCE RULING, RAJASTHAN – 2018 (19) G. S. T. L. 380 (A. A. R. – GST) – Supply or not – amount passed on to the customer by Del Creder Agent (DCA) on account of the early payment before credit period allowed by principal – supplier/receiver in the transaction – classification of such Supply and its HSN/SAC Code and applicable GST Rate – exemption under N/N. 12/2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f. 01.07.2017 – credit of the ITC of the GST charged on such supply.
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Held that:- As per pricing policy of RIL dated 15.06.2018 regarding supply of goods for sale, the cash discount of ₹ 800/MT/Day is applicable on all grades except plant sweepings and waste grades and will be deducted from the basic price as per price Circular for payment of GST. Further, an additional bonus / discount of ₹ 80/ MT/ Day is available on early payment made by the applicant or the customer against such supplies made by the RIL, if such
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pient of the goods or services, he is not liable to issue invoices in respect of goods or services supplied by the principal. When there is no supply to DCA by customer, the DCA is not entitled to take ITC of GST passed on to the DCA in any manner.
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Ruling:- The additional bonus passed on by the applicant (DCA) to the customer, is not in nature of a supply in accordance with GST Act, 2017.
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Since, the said transaction is not a supply by the customer; invoice cannot be raised/ issued by the customer and if any amount passes on to the DCA in any manner, the DCA is not entitled to take ITC of the said amount passed on by the customer. – AAR No. RAJ/AAR/2018-19/20 Dated:- 13-10-2018 – NITIN WAPA AND HEMANT JAIN MEMBER Present for the applicant: Shri Hemendra Choudhary, CA (Authorised representative) Note: Under Section 100 of the CGST/RGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/RGST Act
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aised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the application is admitted to pronounce advance ruling. 1. SUBMISSION OF THE APPLICANT: 1.1 The applicant is a Del Creder Agent (DCA) of Supplier of Goods. The applicant takes order from the customers and places these orders with the Principal (actual supplier of goods to customers and receiver of payments). Collection of payment from customers is the responsibility of DCA. 1.2 Normally, Principal takes Bank Guarantee (BG) and / or Security Deposit against which principal assigns certain limit to the DCA in their system. Within that limit, DCA is allowed to place orders of the customers. At the end of the month, for the orders booked through DCA and goods supplied by the principal, DCA gets the commission from principal for which DCA raises invoices on the principal along with GST. 1.3 If payment is made directly by the DCA before due date (before 10
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ntive is given to the customer as per the pricing policy of Principal. 1.6 In case of any delay in supply or any quality issue, it is principal who directly compensates the customer. DCA does not buy, store or sale any material of principal to any customer and therefore there is no transaction of any purchase or sale of goods in his books. 1.7 On some occasions, when the buyer is not in a position to pay to principal on the due date, he approaches DCA to extend short term loan and the loan is extended by the DCA by making payment to the principal on behalf of the customer. The loan is repaid to DCA by the customer along with agreed interest. 1.8 If a customer makes the payment to DCA earlier than 10 days then the customer ask for the reimbursement towards early payment at a predetermined rate, as is being offered by the Principal. 2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT Applicant has sought ruling to be pronounced under section 97 (2) (a) (b), (d), (e) and (g) of the CGST Ac
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has outward supply as(i) Commission Agent Service on which GST is paid @ 18% (ii) the Finance in terms of Loan and advance on which interest income arises which is exempt under CGST Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f. 01.07.2017, as amended from time to time and corresponding Raj. GST Notification issued by Government of Rajasthan? 3. Personal Hearing (PH) 3.1 In the matter personal hearing was given to the applicant. Mr. Hemendra Choudhary, CA (Authorised representative) of applicant appeared for personal hearing on 08.10.2018. During the PH he reiterated the submissions made in the application. He was requested to produce the copy agreement between the DCA and the Customers and also to produce billing commission papers between Reliance and the DCA within two days of hearing. He agreed to provide the documents and requested that the case may be decided on above submission at the earliest. 3.2 In this context, the jurisdictional officer
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art of the original supply between Principal and Customer. From the above position it appears that the said reimbursement is not covered under the definition of Supply. A similar view has also been taken by the Gujarat Authority for Advance Ruling Goods and Service Tax enclosed with the application for Advance Ruling submitted by the applicant. 4. Findings, Analysis and Conclusion: 4.1 We have gone through the contents of the application filed by the applicant, submission made at the time of personal hearing and comments of the jurisdictional officer and find that the applicant and Reliance Industries Ltd. ( in short RIL) are in agreement vide dated 13.10.2017 for Agreement of Agency on Del Credere Basis. As per pricing policy of RIL dated 15.06.2018 regarding supply of goods for sale, the cash discount of ₹ 800/MT/Day is applicable on all grades except plant sweepings and waste grades and will be deducted from the basic price as per price Circular for payment of GST. Further, an
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within prescribed time limit of 10 days. In this situation the applicant is required to pass on the bonus to the customer as per rate allowed by the principal. The applicant has sought clarification whether such passing on the bonus is in the nature of any supply. 4.4 To clarify the situation, the applicant was asked at the time of personal hearing to submit the DCA- customer agreement also. The applicant vide their letter dated 10.10.2018 submitted that there is no separate agreement with customer in relation to supply of goods or services from the RIL. 4.5 We are of the view that the transaction made between DCA and the Customer for passing on the specified bonus given by the principal is nothing but an additional discount given for early payment made by the customer. In this case there is only one supply made by the principal to the customer. The additional discount relates to supply already made by the principal and passing on such bonus to the customers by DCA is in the nature of
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the goods and services only. In the instant case, the customer is recipient of the goods supplied by the principal and any amount due to him can be adjusted by credit notes/ debit notes in relation to that supply. As the customer is recipient of the goods or services, he is not liable to issue invoices in respect of goods or services supplied by the principal. When there is no supply to DCA by customer, the DCA is not entitled to take ITC of GST passed on to the DCA in any manner. 5. In view of the foregoing discussion, we pronounce the ruling as under:- RULING 1. The additional bonus passed on by the applicant (DCA) to the customer, is not in nature of a supply in accordance with GST Act, 2017. 2. Not applicable. 3. Not applicable. 4. Since, the said transaction is not a supply by the customer; invoice cannot be raised/ issued by the customer and if any amount passes on to the DCA in any manner, the DCA is not entitled to take ITC of the said amount passed on by the customer. – Cas
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