TaxTMI 
TaxTMI 
2019 (3) TMI 540
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....notifies schemes with similar conditions periodically. So whether the ITC can be claimed in all such similar schemes. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS SOUGHT 1. This Application is being filed by M/s. Biostadt India Limited ('the Applicant'/the Company'). The Applicant, having Good and Service Tax (GST) Registration No. 27AACCB1830G123 is inter alia engaged in the business of developing, manufacturing and distributing crop protection chemicals and hybrid seeds. 2. Biostadt India Limite....
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....entitled to one 10 grams Gold coin. The products that need to be lifted during the scheme are as under: Products Qty.(kgs/Itrs) Biozyme Liquid 250 Biozyme Granules 1000 Amaze-X 200 Rejoice 30 Roko 50 Biomycin 50 Maiden 20 Collections: If the customers after lifting the products from the applicant, make payment in the prescribed staggered manner shall be entitled to one 8 grams Gold coin. The payment schedule for the customers during the scheme is as under: Month Collection Amount (Rs.) June 1 lakh July 1.5 lakh Aug 1.5 lakh Total 4 lakh c. Only the above mentioned products are eligible under the scheme. d. Stock returns are not allowed under the said scheme. e. No other discounts are eligible under the said scheme. f. Both the legs of the scheme are independent of each other. Customer satisfying any one leg will be entitled to reward of that leg only. g. A meeting will be called at the end of the scheme period and customers who have satisfied either of the lifting or collection criteria shall be entitled to attend such meeting. h. During the meeting the customer shall be rewarded w....
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.... Section 2(63) of the CGST Act defines Input tax credit as the credit of input tax. Inputs is defined under Section 2(59) of the CGST Act to mean any goods other than capital goods which are used or intended to be used by a supplier in course or furtherance of business. Gold coins are inputs for the applicant and GST levied on such purchase qualifies to be an input tax for the purpose of Section 16(1) read with Section 2(62) of the CGST Act. In course or furtherance of business: The notable requirement under Section 16(1) of the CGST Act is that the credit of input tax claimed on a supply of goods or services should be used in course or furtherance of the business. While the term business is defined under CGST act, the phrase "in course or furtherance of business" is not defined in the law. Dictionary meaning of the term "furtherance" implies advancement, promotion of scheme, etc. Therefore furtherance of business would imply advancement of business, promotion of business. Any activity carried on with a purpose to achieve business objectives, business principles, business continuity and stability would per se amount to an activity in course or furtherance of business....
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....ch are disposed of by way of gifts or free samples. However it is imperative to understand the ambit of term "gifts". 2.9. The term gift is not defined under CGST Act. Hence reference needs to be made to other statutes or jurisprudence available on the same. The Gift-Tax Act (18 of 1858) had defined the word gift to mean transfer by one person to another of any existing movable or immovable property voluntarily and without consideration in money or money's worth. The Honorable Supreme Court cited the definition of 'gift' from Corpus Juris Secundum, Volume 38 in the case of Sonia Bhatia v. State of UP [1981 SCR (3) 239,1981 SCC (2) 585) = 1981 (3) TMI 250 - SUPREME COURT as follows: "A 'gift' is commonly defined as a voluntary transfer of property by one to another, without any consideration or compensation therefor. A 'gift' is a gratuity and an act of generosity and does not require a consideration, but there can be none; if there is a consideration for the transaction, it is not a gift. 2.10. On the basis of above jurisprudence, one can reasonable conclude that gift is a gratuity and does not require any consideration. If a consideration is attached to a transactio....
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.... 4 lakh 6 Terms & Conditions: • Only above listed products are eligible for the scheme • Gold price is calculated @ Rs. 3200/-per gm • No other discounts are eligible under the scheme • Scheme Period is from June'18 to Aug'18 • Customers who lifted the products as per the scheme and made payments as per the scheme are invited for meeting. • Prices of the products vary for different SKUS • No Stock Returns under the scheme. • In case of any discrepancy company reserves the right to modify/cancel the scheme without prior notice THE CENTRAL GOODS AND SERVICE TAX ACT (CGST), 2017 Relevant provisions under CGST Act, 2017: 1. Inputs [Section 2(59)1: "Input" means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. 2. Input Tax [Section 2(62)1: "Input tax" in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes (a) the integrated ....
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....ilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: 7. Blocked credits (Section 17(5): Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely: (a) motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely: (A) further supply of such vehicles or conveyances; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both (i) food and beverages, outdoor catering, beauty' treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, he....
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....ansfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section; [Explanation.-A transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income tax Act, by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money's worth, shall be deemed to be a gift made by such person;] Additional submissions dated 19.11.2018 We reiterate our submissions dated 23.08.2018, 10.09.2018 & in the course of preliminary hearing wherein we have sought ruling on admissibility of input tax credit of tax paid on purchase of gold coins for our sales scheme. Without rejudice to written submissions dated 23.08.2018, we further submit that: • Tax paid on purchase of Gold coins qualifies as Input Tax: • Input tax as defined under section 2(62) of the CGST Act includes CGST, respective SGST and UTGST, IGST and so on. • Sect....
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....ly request your good offices to consider our application for allowability of Input Tax Credit on gold coins distributed as per terms and conditions of a scheme. ---> Value of Gold coins is not to be included in the value of goods: --- Section 15(1) of CGST Act provides that value of supply of goods shall be the transaction value i.e. price actually paid or payable for said supply of goods where the supplier and recipient of supply are not related and price is the sole consideration for the supply. --- Related persons is defined in explanation to section 15 of CGST AGNES --- Our customers do not fall under any of the said criteria of related person --- Price of all the products are pre-defined and customers are obliged to pay that price for purchase of products. --- Price is the sole consideration received from the customers for sales made by us. --- Section 15(1) criteria is satisfied in our case and hence value of supply of goods should include only the price that is payable by the customer. Value of gold coins cannot be clubbed with value of supply made by us. --- Moreover, cost of gold coin to be distributed at the end of scheme is factored in sales price....
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....ision relating to the claim of input tax credit is covered u/s 16 of the CGST Act 2017. The section heading reads as "Manner of taking input tax credit". The term "input tax credit" has also been defined U/S 2(63) of the CGST Act 2017 as credit of "input tax" as defined in section 2(62). 3. "Input" is defined u/s 2(59) of CGST Act 2017 to mean any goods other than capital goods which are used or intended to be used by a supplier in the course or furtherance of business 4. What is important in the definition of input is the use of the phrase "in the course or furtherance of business". While the term "business" has been defined, the phrase "in the course or furtherance of" has not been dealt with in any manner under the GST law. Hence, there is no definite yardstick to find out whether some activity is being carried out in the course or furtherance of a business or not. Each case would need to be examined, based on its facts, on the touchstone of the definition of inputs'. 5. In the course or furtherance' is not defined, but is broad enough to cover any supplies made in connection with the business. It is important to note that only supplies received by a taxable person that....
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....on goods given away or disposed as "gifts" should not be available when no tax is being paid on their disposal. The logic of satisfying Section 16 is of no avail to earn this credit lawfully, because Section 17(5) itself starts with a non obstante clause, which means even if Section 16 allows, Section 17(5) shall block. Moreover, Section 17 (5) is a specific provision because it is an established principle that specific provisions prevail over general provisions. This doctrine has always been upheld. The cases on the subject will be found collected in the third edition of Maxwell which is generalia specialibus non derogant'- i.e. general provisions will not abrogate special provisions'. Similar application arises when there are two provisions under the same statute also, one of which is specific and the other general. If there is dispute between Section 16 and Section 17(5), Section 17(5.) should prevail. It would be appreciated that Section 16 is a general provision and Section 17(5) is specific. Section 17(5) over rides Section 16 in clear words. Furthermore, though 17(5) is non obstante clause unless Section 16 conditions fulfilled ITC is not eligible and once eligible if not hi....
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....icated under GST ACT. In the case of KONE ELEVATOR INDIA PVT LTD VS. STATE OF TAMIL NADU as reported in (2014(304) ELT 161. (SC) = 2014 (5) TMI 265 - SUPREME COURT it has been held that, it should be strict and literal, what is applicable in one taxing statute may not be applied to another taxing statute (Per: F.M. Ibrahim Kalifulla.] (Para-84). Hence, the case law. cited by the applicant in this respect is not acceptable. 8. In case the Advance Ruling Authority' accepts the contention of the applicant and allows the availment of ITC on gold coins, then the accounting of the stock and disbursement of gold coins should be required to be maintained. Para : in the light of the above discussion, we pray that the Honorable Advance Ruling Authority may pass an order as deemed legal and necessary in the interest of revenue, This reply is made with the approval of the Additional Commissioner, Mumbai Central CGST & C. Ex. Commissionerate 04. HEARING The Preliminary hearing in the matter was held on 18.09.2018, Sh. Parag Mehta, C.A. Along with Sh. Jinesh Shah, C.A. and Sh. Prashant Nagar, manager appeared and requested for admission of application as per details in their appli....
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....ion 16(1) read with Section 2(62) of the CGST Act 2017 (hereinafter referred to as "the Act'). It has been submitted that the gold coins are not inputs because the said Distribution of gold coins is not in line with the basic business model, the gold coins are not essential for continuity in supply and the distribution of gold coins are not concerned with the making of taxable supply for consideration unless the distribution is looked as a hidden discount. We find that the applicant has floated the subject scheme for the period June, 2018 to August, 2018 only, by way of which gold coins of different denominations would be given to those customers who lifted a certain quantity of products or made a certain amount of payment. Thus it is seen that it is only those specific customers who fulfill the conditions would be able to avail the benefit of the subject scheme. The applicant has submitted that the said Gold coins are inputs for them and GST levied on such purchase qualifies to be an input tax for the purpose of Section 16(1) read with Section 2(62) of the CGST Act. We find that the provisions of ITC are governed by Sections 16 and 17 of the CGST Act, 2017. In order to avail....
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....usiness houses which promise to give 'assured gifts' to their customers, for eg. In the city of Mumbai and its suburbs various builders had floated advertisements stating that the first x numbers of buyers of flats in their residential construction projects would be give a car/100gms. Gold coins, etc. Similarly malls in Mumbai also offer assured gifts on purchase above certain amounts by their customers. Hence in the present context the word 'gift' has an enlarged scope according to us and has its own colour. In all such cases, as in the present case, the statement that goods, in this case gold coins, will be given to customers who satisfy certain conditions is nothing but assurance of giving away gifts on those conditions being achieved by the customers. Under the GST laws the intention for non-granting/denial of setoff is envisaged in situations where there is no tax on output supply. In cases where the goods are procured with levy of input tax and are supplied without tax being paid on such output supplies, the scheme of the GST Act provides no input tax credit, except export. Schedule I to the CGST Act, 2017 deals with activities to be treated as supply even if made without ....
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....in if the distributor purchases certain amount of company's product or makes payment in a prescribed manner, then he shall be entitled to a gold coin of specific weight. This can be inferred as if the distributor of the applicant is providing services of increased sale for which consideration is in the form of a gold coin. As per Section 7 of the CGST Act, disposal, or the case may be, barter, made or agreed to be made for a consideration in the course or furtherance of business is supply liable to tax. We find in the present application, the applicant has not shown proof of payment of output tax. The only conclusion that can be drawn in the present case is that the distribution of gold coins by the applicant is not but gifts and hence the transaction is covered by the provisions of Section 17(5) of the Act. To sum up ITC on "gifts" will not be available when no GST is being paid on their disposal. Just because the applicant submits that they have satisfied Section 16 (1) of the CGST Act 2017 does not mean that they are entitled to credit since Section 17(5) starts with "Notwithstanding anything contained in sub-section (1) of Section 16 ........." The implication is that in the....