Post-Sale Discounts allowed u/s 15(3) of GST Act: Bombay HC in Interim Relief to Hindustan Coca-Cola [Read Order]

The Bombay High Court has made a preliminary observation that Post-Sale Discounts are allowable under section 15(3) of the Goods and Services Tax Act, 2017 in a case pertaining to alleged contraventions of the Goods and Services Tax Act by way of discounts on the basis of past transactions by Hindustan Coca-Cola.

The fundamental point raised in the present writ petition was that the Revenue had completely misconstrued the provisions of Section 15(3)(a) of the CGST Act. The Petitioner contended that the interpretation of Section 15(3)(a) adopted by the Revenue not only ran counter to its express language but, if accepted, would also conflict with the provisions of Section 15(1), which essentially stipulated that the value of supply of goods or services, or both, should be based on the transaction value.

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The Petitioner further asserted that, through the impugned order, the Revenue Authorities had erroneously concluded that the Petitioner’s distributor had first extended the discount to the retailers, and thereafter the Petitioner had given a sales discount to the distributor in subsequent supplies, based on the discount passed on by the distributor. This sequence, the Petitioner maintained, was duly recorded in its Distributor Management System.

On the other hand, the Revenue Authorities alleged that the procedure adopted—of offering discounts based on past transactions—was intended to circumvent the provisions of the GST Act, thereby resulting in the undervaluation of current supplies and the evasion of GST liability.

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The Bombay High Court, on a prima facie basis, found the reasoning of the Revenue to be correct. Nevertheless, the learned Advocate appearing on behalf of Respondent No. 3 sought time to file an Affidavit-in-Reply to the writ petition. The Court, acceding to her request, directed that the Affidavit-in-Reply be filed on or before the stipulated date.

The bench of Justices Firdosh P. Pooniwalla and B. P. Colabawalla noted that, “As far as the interim relief is concerned, we find that the strong prima facie case is made out for staying the effect and implementation of the impugned order. We say this because as recorded earlier, we do not find at least prima facie that the reasoning employed by the 3rd Respondent is correct.”

The case is now listed for hearing to 29th April, 2025.

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To Read the full text of the Order CLICK HERE

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