The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax on discount towards sale of goods.
The bench of P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) has observed that discount towards sale of goods, is excluded from the definition of ‘service’ under Section 65B(44) of the Finance Act, 1994 and thus not chargeable to Service Tax under Section 66B of the Act for the period from July 2012.
The Appellant/assessee is in the business of manufacturing and selling of fertilizers, chemicals, soda ash and other consumer products. One of the products sold by the Appellant is Murate of Potash (MOP). M/s Canpotex Limited, Canada is engaged in manufacture and sale of MOP. The Appellant also buys MOP from Canpotex and sells the same in India.
The payment of the amount is directly linked to purchase of MOP by the Appellant from Canpotex during the agreed period. The amount, therefore, is nothing but an agreed discount in price for sale of goods mutually agreed between the seller and buyer.
The tribunal observed that the price of goods sold by one party to another is governed by the mutual understanding thereof. The seller may offer a discount to the buyer towards the purchase price which will result in reduction of such sale price. The discount can be given in any form. The form of giving the discount cannot modify the nature of such discount being a factor resulting in reduction of the price agreed.
The tribunal held that irrespective of the nomenclature used to describe discounts, so far as the discounts are established under the agreement or under terms of sale or by established practice and the nature of the discounts is known at or prior to the removal of the goods, they shall be admissible as deduction for arriving at the transaction value. The discounts shall be allowed even if they are not payable at the time of each invoice.
Case Details
Case Title: Tata Chemicals Limited vs CE & CGST Noid
Case No.: Service Tax Appeal No.70550 of 2017
Date: 06.01.2025
Counsel For Appellant: Atul Gupta
Counsel For Respondent: Santosh Kumar
- Ms. V. Sangeeta, Chief Commissioner of CGST Hyderabad Zone Retires Tomorrow - July 30, 2025
- How Much Money Does MrBeast Have and How Did He Earn This Much? - July 30, 2025
- How to Borrow Money from Cash App In 2025? - July 30, 2025
