The Federation of Chandigarh Region Automobile Dealers has challenged the decision of the UT excise and taxation department directing to pay Value Added Tax (VAT) on the amount of discount offered to customers.
While receiving the petition, the Punjab and Haryana High Court has issued notice to the Chandigarh Administration asked to file their response before August 24th.
The Court also issued notice why their order directing the automobile agencies to pay value added tax (VAT) on the amount of discount offered to customers not be stayed.
The petitioners reportedly contended that the impugned order issued by assistant excise and taxation commissioner (AETC) is not only illegal but has also been issued without taking into consideration the provisions of the Punjab VAT Act as applicable to Chandigarh.
Learned counsel Sandeep Goyal for the petitioner inter alia submits that under Rule 15 of the Punjab VAT Rules, 2005, as applicable to UT, Chandigarh, while determining the taxable turnover of a person under sub-clause (e) of clause (1) thereof, amount, allowed as cash discount and trade discount is to be excluded, provided such discount is in accordance with the regular trade practice. On the aforesaid premises, it was urged that thus, contrary to it and is legally unsustainable.
The petitioners pleaded that they sell the automobiles at the price as agreed between the buyers and the sellers for which the necessary invoice is issued. The automobile agencies are charging VAT on the sale price of goods as is agreed between the parties and the discount, if any, given to the buyer is deducted from the invoice amount as it is permissible to deduct as per laid down norms. The discounts offered to the customers are part of the sale promotion schemes which are launched by the automobile companies from time to time. Such benefit is passed on to the customer and, therefore, the discount does not form part of the consideration between automobile dealer and buyer thereof.
The case is posted on 24th August 2016 for further hearing.
Read the text of the order below.
