Demo Goods Given to Product Specialists Not Treated as Physician’s Samples | AAR

Case Details: Dynamic Techno Medicals (P.) Ltd., In re - [2025] 178 taxmann.com 711 (AAR-KERALA)

Judiciary and Counsel Details

• Jomy Jacob & Mansur M.I., Member
• Stanly James, CA for the Appellant.

Facts of the Case

The applicant, engaged in the manufacture and marketing of various health aid products, approached the Authority for Advance Ruling (AAR) to determine whether the issuance of demo sets to product specialists for marketing demonstrations would qualify as a ‘disposal’ similar to physician’s samples under Section 7 of the CGST Act and Kerala GST Act. It was submitted that, as part of its marketing operations, the applicant provides demo products to specialists for field which remain the applicant’s property, are not sold to end users, and are returned to the factory as scrap after use. It was contended that such issuance did not involve any transfer of ownership or disposal of goods and, therefore, cannot be regarded as physician’s sample. The matter was accordingly placed before the AAR.

AAR Held

The AAR held that the demo goods issued to product specialists for demonstration purposes do not amount to ‘supply’ within the meaning of Section 7 of the CGST Act, since there is no transfer of title or disposal at the time of issuance. It was observed that the product specialists merely act as custodians of the applicant, and ownership of the demo sets continues to vest with the company throughout their use. It was further clarified that such demo items cannot be compared with physician’s samples, which are distributed free of cost to medical practitioners, whereas the demo units are used solely for demonstrations and later scrapped with applicable GST payment. It was held that the issuance of demo goods for marketing or display does not constitute a supply or disposal under GST.