Case Law Details
In re BMW India Pvt. Ltd. (GST AAR Haryana)
Q1. Whether certain customized lifestyle goods procured by BMW India either from a third party local supplier or imported from outside India for supply of goods during promotion/marketing events organized by the company will qualify as used in the course or furtherance of business in term of the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act)?
Ans. The applicant has contended that the goods supplied by it in the marketing events are intended to earn consideration in the form of reciprocity from customers and increase in sales and brand value of the company. It has further maintained that the customers invited at such events are the existing and potential customers. It is true that the existing BMW customers must have paid some consideration at the time of purchasing BMW motor cars/ motor bikes but this consideration was in a respect of the supply of motor cars or motor bikes. This consideration had not the remotest of the connection with the goods supplied on free of cost basis in the promotional events. As far as the supply of goods to the potential customers is concerned, the issue of consideration does not arise because the potential customers may not be actual customers/ buyers of the applicant company’s motor cars and motor bikes. The company has itself maintained that these free of cost supplies are made with an intention to earn consideration. This statement itself reflects that there is no consideration involved at the time of making of these free of cost supplies. It is also important to refer to the proviso to the definition of consideration as provided under the CGST Act. It contains that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply. It is not the case of the applicant that any part of the amount received or to be received from the existing customers or the potential customers, as the case may be, at the time of supply of taxable products by the applicant company is applied to the goods provided on free of cost basis in these promotional events.
The goods procured by BMW India and supplied during promotion/ marketing events qualify as being used in the course of furtherance of business in terms of CGST/ HGST Act, 2017.
Q2. Whether the company is eligible to avail input tax credit for such goods supplied under the marketing events in terms of the CGST Act, 2017?
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