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2021 (8) TMI 738 - AAR - GSTSubsidy or not - incentives received under “Atma Nirbhar Gujarat Sahay Yojna” dated 16.05.2020 declared by the Gujarat Govt. - supply of service under the provisions of Section 7 under CGST Act or not - scope of Sub Section 2 of Section 7 of CGST Act - inclusion of incentive received under said scheme, in the alue of taxable supply or not - whether 2%/4% incentive received from the State Government, which is over and above the 6% interest received by State Government under the said Sahay Yojna, attracts GST? HELD THAT:- The applicant Bank has disbursed the loan of ₹ 1 lacs to customers @ 8% interest out of which customer is liable to pay interest @2% and remaining 6% interest amount is borne by the State Government. Further, the applicant received 4% as an incentive on the total loan amount disbursed to the customers, over and above the 6% interest amount paid by the Government. The subject incentive specifically provided to the applicant is for motivation and encouragement for the applicant to undertake this specific scheme. By this incentive, the State Government is incentivising the applicant to undertake this scheme and achieve success, for the incentive is not absolute but relative depending on the performance of the applicant. As the incentive is linked to the Amount of Loan disbursed in rupees, we note that the yardstick for incentivising the applicant is based on applicants willingness and performance to achieve targets, which in subject case is the amounts of loan disbursed, the highest incentive being 4% for more than 100 Crore rupees disbursed and the minimum being 2% for upto 10 crore rupees of loan disbursed. The subsidy is granted in public interest, related with welfare of the public or provided to a person/business by Governments, to rationalise the cost impact directly/indirectly on the public. The said incentive has no such bearing on reducing the interest burden of 2% on the customers of the applicant, but incentivising the applicant for its performance of business in said scheme. The issue is not taxability on 6% interest amount given by Government but on the subject incentive amount given over and above the 6% interest amount to the applicant. Further, on reading the schedule III to the Act, there are no merit to entertain subject matter to be covered at any of the 8 transactions mentioned therein. The subject incentive amount liable to GST. The said Incentive is not subsidy and does not merit exclusion from valuation under section 15(2)(e) CGST Act. The subject supply is covered at section 7(1)(a) CGST Act and not covered at section 7(2) CGST Act.
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