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 on refundable security deposits applies only when deposit is adjusted or forfeited; intermediaries must document remittance.
Security deposits collected for supply of phones that are refundable and handled by the manufacturer are treated as security deposits, not immediate taxable consideration; GST is not payable at collection unless the deposit is adjusted against price or forfeited. Dealers should document collection and remittance to the company and evidence their role as a pure agent with no margin; retention of any part by the dealer or application/forfeiture of the deposit triggers GST consequences.