"THERE is nothing free in this world except the grace of God". It is well known that the electronic industry and other FMCG sectors have a cut throat competition and goods are sold by the retailers for a very thin or no margin at all. We have seen retailers / advertisers claiming 0% margin sale. Will any dealer who has invested huge amounts to set-up a retail sales outlet sell goods without profit? Recently a friend of mine who is a retailer for a printer manufacturer proudly claimed to have got an all-expenses-paid trip to Thailand for exceeding the sales target. It is well known that every electronic goods dealer/ retailer receives benefits not specified anywhere in any document, from the manufacturer as incentives or gifts on achieving certain sales targets. These will be in many forms viz. jewellery, conducted tours, luxury cruises, group parties in star hotels, costly gifts and the like apart from cash also. The benefits given to dealers / retailers are not termed as discounts whether primary or secondary. The circulars No. 92/11/2019-GST dated 07/03/2019 and No. 105/24/2019-GST dated 28/06/2019 has left out this vital form of transaction used by the electronic industry to pass on the benefits to the dealers and thereby escaping the GST radar. Hitherto under Section 4 of the Central Excise Act 1944, Transaction Value was defined to mean the price actually paid or payable including any amount that the buyer was liable to pay in connection with the sale whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for advertising or publicity, marketing and selling organisation expenses, storage, outward handling, servicing, warranty, commission or any other matter. Further Rule 6 of CEVA stated that value of goods shall be deemed to be the aggregate of the Transaction Value including money value of any additional consideration flowing directly or indirectly to the buyer. This inclusive definition got into the ambit of TC any amount received by the dealer from manufacturers even subsequent to the original transaction, on account of any reason. These would invariably accrue to the dealer "in connection with the goods sold". These monies or money equivalent will be additional consideration flowing either directly or indirectly from the seller to buyer. The provisions of Rule 6 of the Valuation Rules extended to discharge of sales obligations both in the present and future and would include the amounts paid by the manufacturers to dealers in relation to sale of goods subsequent to the sale. The expressions/terms used in the amended Section 4 to hold that the TV was wide enough to include all elements integrally connected with the sale of excisable goods to be part of the transaction value including the consideration flowing post sales. Coming to GST levy as per section 15 of the CGST Act, the value of a supply is the transaction value actually paid or payable for the supply and includes any amount that the supplier is liable to pay in relation to such supply. It includes incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services. The words amount paid / received subsequently / after the initial transaction, but in connection with the sale is conspicuously absent in this provision. As per section 15(3), value shall not include any discount given before or at the time of the supply if such discount has been duly recorded in the invoice issued. If discount is given after the supply, then it had to be agreed upon at or before the time of such supply and specifically linked to relevant invoices. So, any discount that is not known or specified or recorded before or at the time of supply cannot be part of the transaction value. In this case the amount / gift does not have the nomenclature of discount and also is not known/ specified at the time of initial supply either by the manufacturer or by the dealer. Further, there are no credit / debit notes issued as per section 34 of the CST act by the manufacturer in the name of the dealer and the monies incurred are booked as expenses to the manufacturer himself. The circular 92/11/2019-GST dated 07/03/2019 clarified that samples and gifts supplied free of cost, without any consideration, do not qualify as supply under GST, except where the activity falls within the ambit of Schedule I of the said Act. Further the circular 105/24/2019-GST dated 28/06/2019 clarifies that if the post-sale discount is given by the supplier of goods to the dealer without any further obligation or action required at the dealer's end, then the post sales discount given by the said supplier will be related to the original supply of goods and it would not be included in the value of supply, in the hands of supplier of goods, subject to the fulfilment of provisions of sub-section (3) of section 15 of the CGST Act. However, if the additional discount given by the supplier of goods to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then such transaction would be a separate transaction and the additional discount will be the consideration for undertaking such activity and, therefore, would be in relation to supply of service by dealer to the supplier of goods. In the above mentioned instances, the dealer receives monies / gifts / incentives in various forms (foreign trips) from the manufacturer calculated based on the sales volume. However, the quantum of such monies or benefits was not informed or calculated or even mentioned by the manufacturer at the time of or before the supply. For this reason, it does not fall under the ambit of section 15 of the CGST Act. Here, the dealer being the receiver of this benefit does not have any obligation to any act post sales for or on behalf of the manufacturer, hence is outside the ambit of circular dt. 28/06/2019. The vital aspect is though the amount/ gifts received by the dealer from the manufacturer is directly related to the sale of the goods, the provisions of CGST Act read with circulars quoted above does not consider this as consideration since the same was not known or specified /described before or at the time of supply. In fact, it is clarified that this unless proved is in connection with the supply, cannot be consideration for the supply that is made earlier. The manufacturer has to include the money value of these benefits / gifts given to the dealers in the Transaction value of the goods that were earlier sold to the dealers who supplied them at less or no margin. This loop hole could be used to evade GST on amounts in connection with supply. It is felt that this important part of the transaction that was taken care in the Central Excise Act can miss the GST levy if the terms "payable at the time of the supply or at any other time in connection with the supply of goods or services" is not included in the section 15 of CGST Act. (The author is an Auditor & Tax Consultant and the views expressed are strictly personal.)