In re TVL. Karthik & Co (GST AAR Tamilnadu)
The applicant, a registered GST dealer engaged in wholesale and retail trading of paints and related products, sought an advance ruling on three issues: whether tax invoices raised for non-monetary benefits or perquisites received from manufacturers are valid under the GST Act; whether the value on which TDS is deducted under Section 194R of the Income Tax Act should be treated as “supply”; and whether such a transaction qualifies as supply under any notification or section of the GST law. The applicant receives non-monetary benefits such as free gifts, complimentary items, and tour packages from their paint manufacturers for themselves as well as for their customers, particularly painters who purchase the manufacturers’ products. Manufacturers deduct TDS at 10% under Section 194R on the value of these perquisites, with such deductions appearing in the applicant’s Form 26AS. Based on this, the applicant has issued tax invoices including GST on the value of the perquisites, but manufacturers have declined to accept these invoices, arguing that the non-monetary benefits do not constitute supply under GST.
Read AAAR Order in this case: AAAR Remands GST Case After Finding Contradictory Facts in Dealer Incentive Case
The applicant contended that once a benefit is treated as income under the Income Tax Act and subjected to TDS under Section 194R, it should be treated as consideration under the GST Act. They sought clarity so that both tax statutes operate consistently. During the personal hearing, the authorised representative reiterated the submissions, explaining the business structure and the nature of non-monetary considerations received. The Authority requested documentation such as franchise agreements, accounting treatment of the benefits, and evidence of arrangements with the manufacturers. However, the applicant did not provide these additional documents apart from sample invoices. Due to the statutory time limit for deciding advance rulings, the Authority proceeded based on the material available.
