ITC is not available on input services procured for promotional schemes: AAAR

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  • Last Updated on 29 July, 2022

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Input tax credit

Case Details: Appellate Authority for Advance Ruling, Tamilnadu GRB Dairy Foods (P.) Ltd., In re - [2022] 140 taxmann.com 414 (AAAR-TAMILNADU)

Judiciary and Counsel Details

    • M.V.S. Choudary & K. Phanindra Reddy, Member
    • S. Sridharan, VP Sales & Marketing & G. Viswanathan, C.A. for the Appellant.

Facts of the Case

The appellant was engaged in the business of manufacture and supply of ghee and other products and sold products through various retail stores across the country. With the objective of expanding the market share, the appellant had launched a sales promotional offer to enhance sales of its products. It filed an application for advance ruling to determine whether ITC would be eligible on inputs/input services procured to implement promotional scheme. The Authority for Advance Ruling held that GST paid on inputs/input services procured by the appellant to implement the promotional scheme was not eligible for Input Tax Credit under the GST law. It filed appeal against the order.

AAAR Held

The Appellate Authority for Advance Ruling observed that goods and services distributed under promotional scheme were without consideration and those goods and services were not for further supply but for consumption by retailers under scheme. Moreover, the inputs and input services procured by appellant were for his buyers provided as rewards and not for his own activity such as advertising product. Since, the rewards extended to retailers/stockist under scheme were not in nature of discount, therefore, ITC of GST paid on such inputs/input services procured would not be available.

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