Can Post-Supply Trade Discounts Reduce GST Transaction Value? Allahabad HC to Examine Oppo Mobile’s Plea [Read Order]

The Allahabad High Court is set to examine the validity and taxability of post-supply trade discounts under the Goods and Services Tax (GST) regime.

Oppo Mobile India Private Limited, the Indian subsidiary of the Chinese electronics manufacturer OPPO, filed a writ petition challenging the validity of Section 15(3)(b) of the Central Goods and Services Tax (CGST) Act, 2017.

Section 15(3) of the CGST Act deals with the exclusion of discounts from the taxable value under GST law.

However, discounts given before or at the time of supply are allowed if such discount is duly recorded in the invoice issued in respect of such supply; discounts given after supply of the goods or services are excluded from the taxable value only if they were established in terms of an agreement entered into at or before the time of supply, are specifically linked to relevant invoices, and the recipient reverses the input tax credit attributable to the discount.

Oppo Mobile has questioned the validity of these statutory requirements governing post-supply discounts.

Dhananjay Awasti appeared for the revenue and Ashish Kumar appeared for the Union of India.

Senior advocate Tarun Gulati appeared for Oppo Mobile, assisted by Nishant Mishra and Kunwar Samarth. The challenge relied on the decisions of the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Advani Oerlikon (P.) Ltd. (1980) and Southern Motors v. State of Karnataka (2017).

It was submitted that trade discounts arising from the original supply agreement, but computed later may not give rise to any disability with the supplier vis-à-vis the transaction value or the amount receivable under such agreement.

It was also pointed out that Section 15(3)(b) of the CGST Act has been proposed to be deleted following the recommendation of the GST Council in the Finance Bill, 2026.

On merits, objection was also raised to the invocation of Section 74 of the CGST Act, which applies in cases where tax is alleged to have been short paid or input tax credit wrongly availed by reason of fraud, wilful misstatement or suppression of facts.

In this regard, it was also submitted that Oppo Mobile may have already deposited 10% of the disputed tax amount.

A Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla observed that “to the extent validity of the law has been put in question and prima facie case is made out to invite deeper scrutiny.”

Noting that the present case sought interim protection, the Allahabad High Court stated that subject to 10% of the disputed tax being deposited (including any amount already deposited or recovered), no further recoveries be made from the petitioner during pendency of the writ petition.

The High Court also directed the issuance of notice to the Attorney General of India and that the case be listed on the date fixed.

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