Free supply

[Amresh kumar]

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

AI Summary

Free supply and cess: absence of consideration may preclude cess levy, but compensation cess law may still apply.
An AAR finding that free promotional items are not subject to GST because there is no supply suggests no levy of compensation cess; however, several respondents note compensation cess is imposed under a separate ad valorem statute and may not be covered by a GST-focused AAR, so affected parties may seek rectification of the order, file a separate cess application, or pursue writ remedies if the AAR omits cess treatment.