In a significant interim relief, the Delhi High Court has stayed a GST demand of ₹9.85 crores (approx.) raised on Vardhman Electronics, a retailer of electronic goods, for discounts received from manufacturers via credit notes. The Revenue had alleged that such discounts amounted to a taxable “service” rendered by the retailer in promoting the manufacturer’s goods.
The High Court, comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta, took the prima facie view that discounts offered by manufacturers cannot be equated to consideration for services rendered by the retailer, thereby staying the impugned order passed by the Additional Commissioner, CGST Delhi West.
Key Highlights:
- Petitioner’s Argument: There is no underlying “supply” or “consideration” involved; the transaction is a mere commercial arrangement linked to purchases.
- Revenue’s Stand: Discounts are a form of consideration for the act of promoting sales, hence taxable under GST.
- Court’s Prima Facie View: The approach of the Revenue is flawed; discounts do not amount to service and hence cannot attract GST.
- Next Hearing: The matter is listed before the Court on September 25, 2025.