Case Law Details
In re Rodec Pharmaceuticals Private Limited (GST AAR Uttar Pradesh)
Question-1 Whether the GST paid on inputs/input services procured by us for promotional scheme are eligible for input tax credit under the GST law in terms of section 16 read with section 17 of the CGST Act, 2017?
Answer- The promotional scheme was extended by the applicant at their own will voluntarily without any consideration in money. The goods distributed under promotional scheme are not in the nature of discounts to the products but are in the nature of personal consumables and qualifies to be termed as gifts. The ‘Scheme Circular’ provided by the applicant alongwith Form GST ARA-01 also contains the words ‘Gift Option 1’, ‘Gift Option 2’ and ‘Gift Option 3’. Further, the gift items are fixed based on the retailers purchase of the targeted products as per Annexure C of the Form GST ARA-01 and not on the sales made by the retailers. Moreover, the rewards are handed out to the successful retailers and no tax invoice/any taxation document are raised for such handout. Also, the goods are distributed on fulfillment of the conditions of the scheme, with no separate consideration, therefore, the distribution of goods and services to the retailers as per the Scheme is not a ‘Supply’ as defined under Section 7 of the CGST Act. Section 17(5)(h) expressly restricts ITC on such gifts, even if they are procured in the course of furtherance of business. Therefore, it is clear that the tax paid on the goods procured for distribution as rewards extended by the applicant in the ‘Bumper Offer, Winter Bonanza’ scheme or any other such scheme is not available to them as ITC in as much as such rewards have been extended as gifts on purchase of animal health products.
As such, the answer of the first question raised by the applicant in the application of advance ruling is negative in our view.
Question-2- Also, whether Input Tax Credit is admissible to us in respect of tax paid on
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