Case Law Details
Supreme Paradise Vs Assistant Commissioner (ST) (Madras High Court)
Madras High Court held that if a discount offered on a supply is also directly linked to subsidy by a 3rd party, the value of such subsidy will be includible in the “transaction value” of the supply. In other words, a discount linked to the subsidy alone can form part of the “transaction value”.
Facts- The petitioner is engaged in retail sale of mobile phones. The department had issued notices to the petitioner in DRC-01.
Notably, in the impugned orders, it has been concluded that discount on the value of supply can be allowed only in the cases specified in Section 15(3)(a) and (b) of the respective GST enactments. It has been concluded in the impugned orders that the wordings of Section 15(3)(b) of the respective GST enactments clearly state that value of supply shall not include any discount, which is given after the supply has been effected.
Conclusion- If the value of supply is subsidised by a 3rd party, the transaction value of the supply will include the value of such subsidy. Only if the price is subsidised by the Central Government or the State Government, the value of supply will not include such subsidy. If a discount offered on a supply is also directly linked to subsidy by a 3rd party, the value of such subsidy will be includible in the “transaction value” of the supply.
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