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2023 (9) TMI 126 - AAR - GSTInput Tax Credit - supply or not - Nature of target-based gift/incentive - applicant’s obligation to issue gold coins and white goods to the dealers upon they achieving the stipulated lifting of the material/ purchase target during the scheme period - goods disposed of by way of gift or not - Input Tax Credit - permanent transfer or disposal of business assets where ITC has been availed on such assets - HELD THAT:- From the promotional / incentive schemes, it is clear that the applicant is supplying goods to his dealers as incentive for achieving the targets and the same is part of a scheme which the parties are in knowledge in advance. It is also noted that it is not supply of any quantity of gold/ white goods to any dealer, but a specified quantity determined as per the terms and conditions of the scheme documents - Thus it is seen that achievement of marketing targets set by the applicant, is an inducement from the dealer or in other words non-monetary consideration paid by the dealers for the supply of gold / white goods by the applicant. As per entry 1 of the Schedule I, “permanent transfer or disposal of business assets where input tax credit has been availed on such assets” would cover the activity of distribution of white goods or gold as incentive and hence would be treated as a supply of such goods as per clause (c) of Section 7(1) of the CGST Act. Whether the input tax credit of the tax paid on the gold coins and white goods are admissible or not? - HELD THAT:- Subject to the charging of tax in the invoices issued by the suppliers of gold coins and white goods, the same is eligible to be claimed as input tax credit and the same has been claimed by the applicant - applicant is issuing these gold coins and white goods so procured as incentives as per the agreement reached between himself and the recipients. It is only issued subject to the fulfilment of certain conditions and stipulations. Gift is something which is given without any conditions and stipulations and hence the same cannot be covered under the scope of “gift” - Since the goods are not given as gifts this clause is not applicable to the present transaction - the input tax credit so claimed under section 16 does not become unavailable under section 17(5)(h) of the CGST Act. Given that the distribution of gold coins and white goods are treated as supplies and attracts the tax liability on such distribution, the input tax credit is not restricted under any of the provisions of Section 17 more so under section 17(5)(h) of the CGST Act.
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