GST on Refundable Security deposits given on phone

[Deepak Kumar]

Dear Sir

One of my friend, who was a dealer of Ji* phones he as recently been issued a notice from GST department for not paying GST on amount collected from the customers towards JI* phones. Basically, as per the terms and conditions of Re*ianc* Company, on 2019, these phones were to be given to the customers at Rs. 1500/- phone, which would be refunded on return of the phone after 36+3 months. This refund will be dealt directly between the customer and Company. Dealers have no role in refund.  Now, my friend, who has sold/supplied these phones, has received a SCN from the department that this consideration is subject to GST.

Is it okay? Shouldn't the department issue the notice to the company.?

AI Summary

GST Notice Challenges Security Deposit Collection Mechanism for Mobile Phones Under Circular 178/10/2022 A dealer received a GST notice for collecting security deposits on phones from customers. The deposit was Rs. 1500, refundable after 39 months, with the refund mechanism managed by the company. Forum experts suggest the GST department should address the tax treatment at the company level, not target individual dealers. Circular No. 178/10/2022-GST indicates GST is not applicable when taking deposits unless adjusted or forfeited. The dealer appears to be acting as a pure agent without retaining any margin.