Intel incentives for marketing support don't qualify as trade discounts under Section 15(3)(b)(i) CGST Act 2017

The AAAR, Maharashtra ruled that incentives received by an appellant from Intel under the Intel Approved Component Supplier Program do not qualify as trade discounts under Section 15(3)(b)(i) of CGST Act, 2017. The Authority held that no direct agreement existed between the distributor and appellant, and the incentives were not linked to specific invoices. The incentives constitute consideration for marketing and technical support services provided by the appellant. Since the marketing services were performed in India where goods were physically available, the supply does not qualify as export of services under Section 13(3)(a).

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Issues Involved:
1. Whether the incentive received from "Intel inside US LLC" under Intel Approved Component Supplier Program (IACSP) can be considered as "Trade Discount"Rs.
2. If not considered as "Trade Discount," whether it is consideration for any supplyRs.
3. If it is considered as supply, whether it will qualify as export of serviceRs.

Summary:

Issue 1: Incentive as "Trade Discount"
- The Appellant argued that the incentive received from IIUL under IACSP should be considered as a "Trade Discount" under Section 15(3) of the CGST Act, 2017. They relied on a previous tribunal decision in Sharyu Motors v. Commissioner of Service Tax [2016 (43) S.T.R. 158 (Tri. Mumbai)] to support their claim.
- The MAAR held that the incentive cannot be considered as a "Trade Discount" because there is no supply of goods or services from IIUL to the Appellant, and the incentives are not linked to a specific invoice but rather to the volume of sales. The agreement exists between the manufacturer (IIUL) and the supplier (Appellant), not with the distributor.
- The Appellate Authority upheld MAAR's decision, stating that the incentives received from IIUL do not qualify as trade discounts as per Section 15(3) of the CGST Act, 2017.

Issue 2: Incentive as Consideration for Supply
- The Appellant contended that the incentive received should not be considered as consideration for any supply.
- The MAAR determined that the incentive received is indeed a consideration for marketing services provided by the Appellant to IIUL, as per the outcome-based contract. The duties outlined in the agreement between the Appellant and IIUL included efforts to sell and market Intel products, assist in Intel's marketing campaigns, and provide technical product support.
- The Appellate Authority agreed with MAAR, stating that the incentive is a consideration for the supply of marketing and technical support services, not a trade discount.

Issue 3: Export of Service
- The Appellant argued that if the incentive is considered as consideration for supply, it should qualify as an export of service under Section 2(6) of the IGST Act.
- The MAAR held that the transaction does not fulfill the conditions for export of service, particularly the condition that the place of supply should be outside India. According to Section 13(3)(a) of the IGST Act, the place of supply in this case is the location of the supplier of services (the Appellant), which is in India.
- The Appellate Authority upheld MAAR's decision, confirming that the impugned supply does not qualify as an export of service.

Order:
- The Appellate Authority confirmed and upheld the Advance Ruling Bearing No. GST-ARA-59/2020-21/B-56 dated 27.04.2022 pronounced by the MAAR. The appeal filed by the Appellant was dismissed.

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