ITC is not available on input services procured for promotional schemes: AAAR

Case Details: Appellate Authority for Advance Ruling, Tamilnadu GRB Dairy Foods (P.) Ltd., In re - [2022] 140 taxmann.com 414 (AAAR-TAMILNADU)

Judiciary and Counsel Details

• • M.V.S. Choudary & K. Phanindra Reddy, Member
  • S. Sridharan, VP Sales & Marketing & G. Viswanathan, C.A. for the Appellant.

Facts of the Case

The appellant was engaged in the business of manufacture and supply of ghee and other products and sold products through various retail stores across the country. With the objective of expanding the market share, the appellant had launched a sales promotional offer to enhance sales of its products. It filed an application for advance ruling to determine whether ITC would be eligible on inputs/input services procured to implement promotional scheme. The Authority for Advance Ruling held that GST paid on inputs/input services procured by the appellant to implement the promotional scheme was not eligible for Input Tax Credit under the GST law. It filed appeal against the order.

AAAR Held

The Appellate Authority for Advance Ruling observed that goods and services distributed under promotional scheme were without consideration and those goods and services were not for further supply but for consumption by retailers under scheme. Moreover, the inputs and input services procured by appellant were for his buyers provided as rewards and not for his own activity such as advertising product. Since, the rewards extended to retailers/stockist under scheme were not in nature of discount, therefore, ITC of GST paid on such inputs/input services procured would not be available.

List of Cases Reviewed

• • GRB Dairy Foods (P.) Ltd., In re [2021] 133 taxmann.com 11/[2022] 89 GST 304 (AAR – Tamil Nadu) affirmed.
  • CCE v. Dai Ichi Karkaria 1999 (112) E.L.T. 353 (S.C.) (para 8.3)
  • Coca Cola India (P.) Ltd. v. CCE [2009] 22 STT 130 (Bom.) (para 8.3) followed.
  • CCE & ST v. Dwarikesh Sugar Industries Ltd. [Order No. 71069 of 2016, dated 18-11-2016]
  • Pepsi Foods Ltd. v. CCE 1996 (82) ELT 33 (Trib. – Delhi)
  • Manhattan Associates Development Centre (P.) Ltd. v. CST [2015] 63 taxmann.com 152/52 GST 1032 (Bang. – CESTAT)
  • Ultratech Cement Ltd. v. CCE 2010 (258) ELT 266 (Tri. – Ahd.)
  • Maruti Suzuki Ltd. v. CCE [2009] 22 STT 54 (SC)
  • Coca-Cola India (P.) Ltd. v. CCE [2009] 22 STT 130 (Bom.)
  • Shree Cement Ltd. v. CCE & ST [2014] 47 taxmann.com 398/47 GST 78 (New Delhi – CESTAT) (para 8.3)
  • C. Govindarajulu Naidu & Co. v. State of Madras AIR 1953 Mad 116
  • Federal Commissioner Taxation v. McPhail [1968] HCA 13 (Australian)
  • Biostadt India Ltd., In re [2019] 103 taxmann.com 127/73 GST 393 (AAR – Maharashtra) (para 8.6) distinguished.

List of Cases Referred to

• • CCE & ST v. Dwarikesh Sugar Industries Ltd. [Order No. 71069 of 2016, dated 18-11-2016] (para 5)
  • Coca-Cola India (P.) Ltd. v. CCE [2009] 22 STT 130 (Bom.) (para 5)
  • CCE v. Dai Ichi Karkaria 1999 (112) ELT 353 (SC) (para 5)
  • Pepsi Foods Ltd. v. CCE 1996 (82) ELT 33 (Trib. – Delhi) (para 5)
  • Manhattan Associates (India) Development Centre (P.) Ltd. v. CST [2015] 63 taxmann.com 152/52 GST 1032 (Bang. – CESTAT) (para 5)
  • Ultratech Cement Ltd. v. CCE 2010 (258) ELT 266 (Trib. – Ahd.) (para 5)
  • Maruti Suzuki Ltd. v. CCE [2009] 22 STT 54 (SC) (para 5)
  • Shree Cement Ltd. v. CCE & ST [2014] 47 taxmann.com 398/47 GST 78 (New Delhi – CESTAT) (para 5)
  • Sonia Bhatia v. State of U.P. [1981] 2 SCC 585 (para 5)
  • Narmadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker [1997] 2 SCC 255 (para 5)
  • Birla Corporation Ltd. v. Dy. CIT [2011] 16 taxmann.com 338/[2012] 134 ITD 142 (Kol.) (para 5)
  • C. Govindarajulu Naidu & Co. v. State of Madras AIR 1953 Mad. 116 (para 5)
  • Federal Commissioner Taxation v. McPhail [1968] HCA 13 (Australian) (para 5)
  • Biostadt India Ltd., In re [2019] 103 taxmann.com 127/73 GST 393 (AAR – Maharashtra) (para 5).