Oppo Mobile India Private Limited Vs Union Of India And 3 Others (Allahabad High Court)
The Allahabad High Court considered a writ petition challenging the validity of Section 15(3)(b) of the Central Goods and Services Tax (CGST) Act. The petitioner argued that trade discounts arising from an original agreement but computed after the supply should not affect the determination of transaction value for GST purposes. Reliance was placed on earlier Supreme Court judgments, including Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) Ernakulam v. Advani Oerlikon (P.) Ltd. and Southern Motors v. State of Karnataka. It was contended that under earlier tax regimes, such discounts arising from pre-existing agreements did not create any disability for suppliers in determining transaction value or the amount receivable for supplies made under those agreements. According to the petitioner, a legislative provision taking a different view may not withstand scrutiny in light of these precedents.
It was also submitted that the provision under challenge is proposed to be deleted by the legislature following a recommendation of the GST Council, as reflected in the Finance Bill, 2026. Additionally, the petitioner raised objections regarding the invocation of Section 74 of the CGST Act in the case. The petitioner further submitted that 10 percent of the disputed tax amount may already have been deposited. After hearing the parties, the High Court observed that the challenge to the validity of the provision raised issues requiring deeper examination and therefore issued notice to the Attorney General of India. The court also granted interim protection to the petitioner, directing that no further recovery shall be made during the pendency of the writ petition, subject to deposit of 10 percent of the disputed tax amount, including any amount already deposited or recovered.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Tarun Gulati, learned Senior Advocate assisted by Sri Nishant Mishra and Sri Kunwar Samarth, learned counsel for the petitioner and Sri Dhananjay Awasti, learned counsel for the revenue and Sri Ashish Kumar, learned counsel for the Union of India.
2. The validity of Section 15(3)(b) of the CGST Act has been put to challenge. Relying on Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) Ernaculam Vs. Advani Oerlikon (P.) Ltd.; 1980 com 291 (SC) (Para 5-7) as also other precedent including Southern Motors Vs. State of Karnataka; (2017) 3 SCC 467, it has been stressed that the trade discount arising from the original agreement but computed later may never give rise to any disability with the supplier vis-a-vis a transaction value or the amount receivable against supplies made in terms of the said pre-existing agreement/contract. The issue has been thrashed out by the Supreme Court unequivocally in favour of the assessee under the pre-existing CGST and VAT regimes. The legislative provision taking a different view may not survive the rigor of law arising from the preexisting law laid down by the Supreme Court.
3. Second, it has been pointed out that the offending provision is proposed to be deleted by the legislature. On the recommendation of the GST Council deletion has been proposed in the Finance Bill, 2026.
4. On merits, objection has been raised to the invocation of Section 74 of the Act.
5. Third, it has been pointed out that 10% of the disputed tax may have already been deposited by the assessee.
6. To the extent validity of the law has been put in question and prima facie case is made out to invite deeper scrutiny.
7. Issue notice to the Attorney General of India.
8. List on the date fixed, showing the names of all counsel appearing for the parties.
9. In view of the observations made above, we do find that the case is made out for grant of interim protection. 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 this writ petition.
