Vardhman Electronics Vs Additional Commissioner (Delhi High Court)
Discount given by manufacturers to retailers, prima facie, cannot be considered as a consideration for services rendered by the retailer
The Hon’ble Delhi High Court in the case of Vardhaman Electronics v. Additional Commissioner, CGST Delhi West & Ors. [W.P. (C) 6334/2025 & CM APPL. 28843/2025 dated May 13, 2025] held that the discount given by manufacturers to retailers, prima facie, cannot be considered as a consideration for services rendered by the retailer.
Facts:
Vardhman Electronics (“the Petitioner”) is a retailer selling various household appliances and other electronic goods. They were served a Show Cause Notice dated September 26, 2023 issued by the Additional Commissioner, CGST Delhi, Audit-II. Consequently, an order dated January 30, 2025 (“the Impugned Order”) was passed by the Additional Commissioner, CGST Delhi West (“the Respondent”) confirming demand of short payment of tax amounting to INR 9,85,22,360/- and additional penalties.
The Respondent contended that the Petitioner is given discounts by various manufacturers. However, the Revenue Department seeks to construe such discounts as income on which GST is payable.
Issue:
Whether discounts given by manufacturers to retailers, can be considered as a consideration for services rendered by the retailer?
Held:
