IMPORTANT POINT
The benefit of Input Tax Credit can only be availed to the extent of the output tax payable upon the goods, as per Section 18(3A) of the RVAT Act-2003.

ORDER :

1. The present Sales Tax Revisions / References (for short "STRs"), filed under Section 84 of the Rajasthan Value Added Tax Act, 2003 (for short "RVAT Act") being aggrieved of the order dated 03.03.2020 passed by the Rajasthan Tax Board, Ajmer (for short “RTB”), were admitted on following questions of law :

In STR Nos. 222-224/2020, preferred by the assessee :

“1. Whether targeted discounts/rebates (off Take Discount and Early Bird Off Take Discount) received on purchase of vehicles can be considered as subsidy under Section 18(3a) of RVAT Act-2003?

2. Whether provisions of Section 18(3A) of RVAT Act-2003 can be shifted on the transactions of purchases?”

In STR Nos. 225-227/2020, preferred by the revenue :

“1. Whether in the facts and circumstances of the case of Rajasthan Tax Board was justified in law and has not acted perversely in confirming the order of appellate authority deleting the penalty under Section 61(2)(b) of the Act when the fact of availing wrongful ITC has been not dispute?

2. Whether in the facts and circumstances of the case of Rajasthan Tax Board was justified in law in treating the provisions of Section 61(2)(b) as per Section 61(1) of the Act and deleting the penalty not appreciating that the provision of the Section 61(2) are independent and the provision starts with non obstante clause?”

Since the issue involved is common, with the consent of the parties, all these STRs were heard together and are now being decided by way of this common order.

SUBMISSIONS OF ASSESSEE

2. Learned counsel for the assessee submits that the assessee is a registered dealer under the provisions of RVAT Act dealing in automobiles and having dealership agreement of automobile manufacturing company Tata Motors Limited (for short “TML”). The vehicles purchased by the assessee from TML are as per various targeted schemes provided from time to time by the supplier company, i.e. TML. TML allows the benefit in the shape of discounts/rebates, e.g. ‘Off Take Discount’, ‘Early Bird Off Take Discount’ from basic purchase value providing book adjustment entries in the party ledger account. IN other words, the payments required to be made to TML are shortly made by the assessee. The tax charged by TML at the time of effecting sales to the assessee do not change its nature and whatever tax is charged in the tax invoices by the supplier company (TML) is paid to the State Treasury without having any relation with the targeted discounts/rebates. The revenue has made out a case of reversal of input tax credit (for short “ITC”) as per provisions of Section 18(3A) of the RVAT Act whereby the sales of the vehicles have been considered as sold on lesser price in comparison to purchase price. Therefore, treating them as sales of vehicles at subsidized rates, the assessee has been held responsible to reverse the ITC claimed as per Tax Account reflected in their books of accounts. Vide the impugned assessment order dated 06.12.2016, the revenue converted the discounts/rebates into subsidized sales and thereafter created demand of reversal of ITC with levy of interest and further imposition of penalty. Upon appeal, the appellate authority, vide order dated 17.02.2017, confirmed the reversal of tax and interest but set aside the penalty. The RTB, vide its order dated 03.03.2020, also confirmed the order of the appellate authority without properly appreciating the position of law and material on record. Being aggrieved, the present STRs are filed.

3. The primary contention of learned counsel for the assessee is that Section 18(3A) has wrongly being invoked and has no application in the facts and circumstances of the present case. In support of this contention, learned counsel made the following submissions:

3.1. The first submission of learned counsel for the assessee is that while granting benefit of discount/rebates, the supplier company did not change the status of the tax account and without passing any benefit of tax component. The benefit has been gran