In re Karthik & Co (GST AAAR Tamilnadu)
The Appellate Authority for Advance Ruling, Tamil Nadu, examined an appeal filed by a registered partnership firm engaged in the wholesale and retail trade of paints and related products. The appeal was filed against an Advance Ruling issued by the Tamil Nadu Authority for Advance Ruling dated 17.11.2025.
The appellant operates under a principal-to-principal model with manufacturers and wholesale traders from whom it procures paints and hardware. In addition to regular trade transactions, the appellant receives benefits from suppliers in two forms: (i) cash discounts through credit notes and (ii) non-monetary benefits such as gifts, complimentary items, entertainment tickets, and trips. These non-monetary benefits are subject to tax deduction at source (TDS) at 10% under Section 194R of the Income Tax Act as perquisites. The appellant has been issuing tax invoices on such non-monetary considerations.
The appellant had initially sought an advance ruling on three specific issues: whether tax invoices issued for non-monetary benefits are valid under GST law; whether the value on which TDS is deducted under the Income Tax Act should be treated as supply under GST; and if treated as supply, the legal basis for such classification under the GST framework. The Authority for Advance Ruling issued its decision on these questions.
