In re GRB Dairy Foods Pvt. Ltd (GST AAAR Tamilnadu)
As per the provisions of the CGST Act/TNGST Act 2017 more precisely, Section 17(5) of the Act, the gifts or rewards given without consideration even though they were given for sales promotion do not qualify as inputs for the purposes of Credit, since no GST is paid on its disposal. Therefore, we hold that the input tax credit on the inputs and input services involved in the goods and services used for the purpose of reward is not available for the appellant and accordingly the ruling given by the Advance Ruling Authority of Tamil Nadu requires no intervention and the appeal is dismissed.
Read AAR Order : No ITC on gifts to retailers for personal consumption for sales promotion
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING,TAMILNADU
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
The subject appeal has been filed under Section 100 (1) of the Tamilnadu Goods 85 Services Tax Act, 2017/Central Goods 86 Services Tax Act 2017 by M/s. GRB DAIRY FOODS PVT.LTD, (herein after referred as the Appellant), having their registered office at No.10 Sidco Shed Sipcot Industrial Complex, Hosur, Krishnagiri District, Tamil Nadu- 635126. The appellant are registered under GST with GSTIN 33AACCG0136G1Z8. They are engaged in the business of manufacture and supply of ghee and other products. Their factory premises at Tamil Nadu and Karnataka are having separate GST registration in both the States. The product groups of the appellant are classified into ghee, masalas, instant mixes and sweets.
The products supplied by them are taxable under the Act and none of the products are either “Exempted” or “Nil rated”. They sell their products through various retail stores across the country and obtain substantial revenue from Export Sales too. With the objective of expanding the market share, the appellant stated that they had launched a sales promotional offer to enhance sales of its products; the sales promotional offer was named as ‘Buy n Fly’ scheme. This scheme was valid from 8th April 2019 to 8th July 2019; This appeal is filed against the Order No. 36/ARA/2021 dated 30.09.2021 passed by the Tamil Nadu State Authority for Advance ruling on the application for advance ruling filed by them.
2. The appellant has stated that as per the scheme the retailers have to purchase the eligible products from the distributor, sub-stockiest and they shall be eligible for the rewards under the scheme once the targets specified therein are achieved. This is a scheme aimed at promoting second leg sales in supply chain i.e. from super-stockiest to retailer which in turn would increase the over-all sales of the company and also the market share. This scheme was made known to retailers/supply chain in advance to ensure that the benefits of promotional activities accrues to the company. It is not a mandatory scheme for all the retail outlets rather it is left to the discretion of the retailers to participate in the scheme. As per the scheme, retail-outlets shall make efforts to maximize the sales of appellant’s products which in turn leads to increase in purchase of products by them from sub-stockiest. The retail outlets have an obligation to increase the sales of the products covered by the scheme as much as possible and once the purchase of products by retail outlets exceeds the specified limit under the scheme they automatically become eligible to’ the rewards/product. Broadly the obligations of the retail outlets under the ‘Buy n Fly’ scheme are as follows:
1. To promote the sales of appellant’s products which in turn leads to more purchase of products by retail outlets from sub-stockiest.
2. The retail outlet is required to maintain proper accounts/documents which indicates the purchases made by them and also sales effected by them under the scheme.
3. The rewards/product specified under the scheme do not accrue to the retailers automatically and/or they cannot claim the same as a matter of right under the scheme.
4. They cannot participate in any other sales promotion scheme(s)/marketing scheme(s) of any other third party/vendor during the tenure of the ‘Buy n Fly’ scheme i.e. 8th April to 8th July 2019.
The terms and conditions of the ‘Buy n Fly’ scheme as contained in the brochure are as follows:
