In re John Distilleries Pvt. Ltd. (GST AAR Karnataka)
The Authority for Advance Ruling, Karnataka, examined whether rebates received from a bank on payment of excise duty through a corporate card are liable to GST. The applicant, engaged in liquor manufacturing, carried out certain ancillary taxable activities such as royalty income, scrap sales, and availing Goods Transport Agency services, for which GST registration was obtained. The applicant used a corporate card issued by HSBC Bank to pay excise duty and received a rebate calculated as a percentage of monthly payments. This rebate was adjusted against the outstanding card balance.
The applicant contended that such rebates are not subject to GST as they constitute transactions in money and do not involve any supply of goods or services. It was argued that GST applies only where there is a supply involving consideration and a corresponding quid pro quo. The applicant relied on statutory provisions defining “money” and judicial precedent to assert that rebates are financial adjustments without reciprocal obligation.
The Authority noted that liquor manufacturing is outside the GST framework and that the corporate card was used solely for excise duty payments. It observed that the rebate was granted as a post-transaction financial adjustment linked to card usage and not in return for any independent supply by the applicant to the bank. Under Section 7 of the CGST Act, a supply requires consideration and a quid pro quo relationship. In this case, no such relationship existed.
