In re MEK Peripherals India Pvt Ltd. (GST AAR Maharashtra)
Incentives received for market services within India cannot be considered as trade discount nor export service
The AAR, Maharashtra in the matter of M/s. MEK Peripherals India Pvt. Ltd., [Advance Ruling No. GST-ARA-59/2020-21/B-56 dated April 27, 2022] has held that incentives received by the Indian reseller of the products for providing marketing services within India for increasing the business of foreign company cannot be considered as trade discount nor it is an export service.
Facts:
M/s MEK Peripherals India Pvt Ltd. (“the Applicant”) is a reseller of Intel products imported from the various distributors of Intel Inside US LLC (“IIUL”) and further sell to various retailers.
The Applicant entered into agreement with IIUL under Intel Authorized Components Supplier Program (“IACSP”) pertaining to a non-biding Plan of Record Target (“POR Target”) under which the Applicant earns certain incentives directly from IIUL as a percentage of performance to quarterly goal on eligible Intel products.
The Applicant submitted that the incentives received from Intel should be considered as trade discount as per Section 15 of the Central Goods and Services Tax Act, 2017 (”the CGST Act”) and thus would not be liable to tax.
Issues:
1. Whether the incentive received from IIUL under IACSP can be considered as trade discount or consideration against supply?
2. Whether the transaction by the Applicant will be considered as supply of service and will qualify as export of service?
Held:
The AAR Maharashtra, in Advance Ruling No. GST-ARA-59/2020-21/B-56 dated April 27, 2022 held as under:
