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Free supply, Goods and Services Tax - GST

Issue Id: - 116894
Dated: 7-12-2020
By:- Amresh kumar
Free supply

  • Contents

Sir/ madam

We have obtained advance ruling regarding promotional & free supply to boost the marketing. The product is cigarette.

Scheme is buy 1 get 2 free .

ARA order clearly says no need to pay GST on free & promotional supply and also no need to reverse ITC.

My query is will the GST cess also be exempted on such free & promotional supply. Since GST is levied advalorum and GST Cess is on qty.

Thanks & regards

Amresh kumar

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Posts / Replies

Showing Replies 1 to 11 of 11 Records

1 Dated: 7-12-2020
By:- Ganeshan Kalyani

Since, the AAR in your case (as mentioned by you) clarifies that there is no GST on free and promotional supply then in my view, there cannot be GST cess as well.

2 Dated: 7-12-2020

dear Sir,

you mentioned in your application regarding the cess, if not, then you need to pay.

3 Dated: 7-12-2020
By:- Amresh kumar

Dear Pawan,

In application we mentioned applicable gst only.

4 Dated: 7-12-2020
By:- Rajagopalan Ranganathan


In my opinion, AAR cannot give exemption from payment of cess. If the order deals with payment of gst on free supply of goods, then you have to pay cess. However you may seek correction of the error of not mentioning cess in the order. If AAR reject your application only remedy is to file a writ petition in the jurisdictional High Court.

5 Dated: 8-12-2020
By:- Alkesh Jani


I agree with the views of Rajagopalan Ranganathan Sir.

6 Dated: 8-12-2020
By:- Amresh kumar

Dear sir,

Gst includes cgst,sgst,utgst and gst cess also.

When gst cess is charged on the free scheme then it defys the logic of free supply and then the Dept may ask to pay gst also saying since gst cess is charged it is not free supply.


Amresh Kumar

7 Dated: 8-12-2020

dear Sir,

comp.cess is levied under different law, to make this cess exempt, you need to file the another application in line with the order of ARA. Otherwise, comp.cess will be payable.

8 Dated: 8-12-2020
By:- Alkesh Jani

Shri Amreshji,

Please refer Compensation Cess Act. The Cess is ad valorem and not on tax as in erstwhile Act. hope this will clear your doubt

9 Dated: 9-12-2020

Sh.Amresh Kumar Ji,

I do not refute the views of the experts but you must go through the following case law of Supreme Court:-

2019 (366) E.L.T. 577 (S.C.) = 2019 (3) TMI 1427 - SUPREME COURT BAJAJ AUTO LIMITED Versus UNION OF INDIA

10 Dated: 9-12-2020
By:- Alkesh Jani


I stand still to the views given before. Making an effort that in erstwhile Act, the Cess and Surcharge were levied on aggregate basis while in Comp.Cess Act it is levied as Ad valorem. This makes lots of difference from my point of view. As an example, in GST decision is passed by high court that if principal supply i.e. Electricity is exempted all other supply forming composite supply will be exempted. while this is not applicable to mixed supply.

In other words in erstwhile Act cess and surcharge were levied on the duty/tax, so if duty/tax is exempted levy of cess or surcharge is not applicable means Cess were depending upon duty/tax. While here it is the case of ad valorem means it is not dependent of duty/tax.

Shri Kasturiji Sir, with due respect, we lay foundation for querist, now it upto him/her to take decision as per their wisdom.

With Due Regards

11 Dated: 9-12-2020
By:- Amresh kumar

Respected Kasturi Sir & Jani Sir, and all

Thanks a lot to all for valuable input.

I am still in the learning stage and hence obliged to you all.


Amresh Kumar


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