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2019 (10) TMI 568 - AUTHORITY FOR ADVANCE RULING, KARNATAKAInput tax credit (ITC) - credit on any goods disposed by way of gift or free samples - Input tax credit on the items purchased for furtherance of business - HELD THAT:- The goods and services so procured and disposed off/ distributed as incentives/ gifts are disposed without any consideration and hence do not qualify to be a supply in terms of Section 7 of the CGST Act. Further no GST is being paid on disposal of the said gift items. Section 17(5)(h) of CGST Act 2017 does not allow credit on any goods disposed by way of gift or free samples, whether or not in the course or furtherance of business, It is an admitted fact that the applicant herein purchases the items to be disposed as gifts under various incentive schemes to dealers/ painters etc. Therefore the applicant is not entitled to avail ITC on such items. Circular No.92/11/2019-GST dated 07.03.2019, issued by the CBIC, wherein, at para (A)(ii), it is clarified that “input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration” In the instant case the applicant offers free foreign / local trips, as incentives, to the dealers / painters etc., without any consideration. Therefore the input tax credit on the services procured (input services); for offering aforesaid services of free trips, is not available to the applicant. Thus, the applicant is not eligible to avail input tax credit on the inward supplies of goods and services which are attributable to the incentives provided in the form of gifts of goods and services to the painters and dealers and other persons under the CGST / SGST / IGST Act.
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