Price-Adjustments on Account of GST : Necessity for Statutory Amendment

Traditionally indirect taxes are linked with transactions in goods or services and understood as those taxes the incidence of which can be passed on to the buyer by the person required to defray the tax to the exchequer. Excise duties, customs duties, sales taxes, etc. are illustration of such taxes. With the introduction of Goods and Services Tax (GST) the indirect tax regime in India has underwent a sea-change. A number of attendant principles, however, do not seem to have been revisited to fine-tune them in light of changes on account of GST. The statutory and legal framework governing price-escalation on account of tax changes is one such area which has been muddled owing to the changes in the GST regime. Section 64-A of the Sale of Goods Act, 1930 stands out as the lone provision governing contractual price-adjustment on account of change in taxes. However there are a number of inherent limitations in the scope and coverage of this provision the least of which is that it is subject to contractual stipulations of the parties who may choose to provide otherwise. The judicial appreciation of this provision and also a survey of the jurisprudence governing price-escalation in cases not addressed by the provision reveals a wavering legal position which is also very fact-specific. An uncharacteristic insertion to this has been made by the anti-profiteering provision in the GST legislations. This article examines these and attendant aspects to opine that there is an urgent need to revisit the statutory framework governing price-adjustment on account of change in taxes.The sections in the article are as under;(1) Introduction(2) Appraisal of Statutory Stipulations(3) Judicial appreciation of Section 64-A(4) Transposing principles in context of Service Tax(5) Issues emanating from Bengal Shrachi decision(6) Position under GST regime (7) Enumerating the issues(8) Conclusion and way forward