K.K. Polymers – 2018 (19) G.S.T.L. 380 (A.A.R. – GST- Rajasthan)

Additional Bonus or discount passed from Del Creder Agent to customer does not constitute Supply

Facts: The applicant is a Del Creder Agent (DCA) of supplier of goods. It takes orders from customers and places these orders with principal. The applicant receives orders from the customers and places it with the principal and goods are directly supplied by the principal to the customer by charging applicable GST on the invoice. Collection of payment from customers is responsibility of applicant. As per pricing policy of principal, customers can avail dispatches either on cash or credit basis. If a customer makes early payment to applicant i.e., before 10 days credit period, then early payment incentive is given to the customer. Also, where there is a delay in supply and quality issue, the principal compensates accordingly. 

Issue: Whether the amount passed on to the customer by DCA on account of the early payment before credit period allowed by the principal constitute “Supply”.

Held: The AAR, Rajasthan held that the transaction between Applicant and the customer for passing on specified bonus is nothing but additional discount for making early payment by the customer and is not in the nature of a ‘supply’ in accordance with GST Act, 2017. Further, observed that the discount offered towards early payment is not a new supply but part of the original supply between principal & customer, AAR opines that “additional discount relates to supply already made by the principal and passing on such bonus to the customers by DCA is in the nature of pure agent”.

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