All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
Scholars have differed about the ruling on what Hanbali scholars called Tawarruq, which is buying on credit and selling at spot value.
Scholars of other Madhabs studied this transaction under the headings of Riba and Bay' al-einah (The purchase of something for the mere purpose of reselling it immediately to its original seller). Tawarruq transaction is reflected in the following form: Someone purchases a certain product on credit for a hundred dinars then sells it to a third party for ninety dinars in cash.
According to our Madhab, Shafie, the eminent scholar Ibn Hajar stated that every sale involving the suspicion of using trick to get around Riba is disliked. He (May Allah have mercy on him) said: "Bay`al-einah and every other sale transaction on whose permissibility scholars have disagreed are disliked." {Tohfat Al-Mohtaj, vol.4/pp.323}.
In addition, Hanafie scholars have stated that it is better to avoid Tawarruq. Kindly check {Raad Al-Mohtaar, vol.7/pp.213}.
We (Iftaa` Department) tell people asking about this type of sale to avoid it unless the following conditions are met:
1- A person is in dire need and has no other alternative and necessities are estimated by the extent thereof.
2- To intend the products bought via Tawarruq for trading and not for getting their value in cash. But, if cash was offered for the products intended for trade, then this is permissible, Insh`Allah. And Allah the Almighty Knows Best.
