TaxTMI 
TaxTMI 
2019 (4) TMI 1943
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....e event, expenses paid for hiring professional services of an event management company, purchase of printed material for the purpose of advertisement, purchase of billboard and hoarding for setting up across the event location, supply of BMW branded lifestyle accessories/ product miniatures on free of cost (FOC) basis to the attendees, distribution of prizes to the winners of competitions organized at the event etc. 1.4 These events are organized by the Company with an intention to increase Its brand visibility, enhance loyalty for its existing customers and attract new potential customers. The company educates the attendees at the events with respect to the upcoming launches and schemes. During the course of these events, the potential customers are identified and are offered test drives of BMW cars, leading to follow ups and eventually resulting in sale of BMW cars, while the existing customers are provided with exchange offers etc. Further, the company representatives at these events also attend to enquiries raised by customers to provide a better understanding to the customers of the cars, offers schemes launched or proposed to be launched by the company. 1.5 At these eve....
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....its FAQ's on meaning and scope of supply. The said FAQs provide that "Business" is defined under Section 2 (17) include any trade, commerce, manufacture, profession, vocation, adventure or wager etc. whether or not undertaken for a pecuniary benefit. Business also includes any activity or transaction which is incidental or ancillary to the aforementioned listed activities. In addition, any activity undertaken by the Central Govt. or a State Govt. or any local authority in which they are engaged as public authority shall also be construed as business. From the above, it may be noted that any activity undertaken included in the definition for furtherance or promoting of a business could constitute a supply under GST law. 2.5 The question arises as to what constitutes a gift. Gift has not been defined in the GST law. In common parlance, gift is made without consideration, is voluntary in nature and is made occasionally. It cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift. 2.6 Section 2 (xii) of the Gift-tax Act defined the term "gift" in the following words: "(xii) "gift" means the transfer....
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....rpose of value addition to one's business. Generally, following business test should be applied in order to determine if the supply is in the course or furtherance of business or not:- a) Is the activity, a serious undertaking earnestly pursued? b) Is the activity, pursued with reasonable or recognizable continuity? c) Is the activity, conducted in a regular manner based on sound and recognized business principles? d) Is the activity, predominantly concerned with the making of taxable supply for consideration/ profit motive? 3.6 In the present case, the company organizes regular marketing events at various locations across the country. Such marketing events include Golf events, joy fest, XDrive experience, press events etc. The company provides certain accessories/ articles such as golf kits, bags, t-shirts, caps, diaries, keychains, passport holders etc. on Free of Cost (FoC) basis to the attendees at the event. The accessories supplied are embossed with the Company's logo for the purpose of enhancing brand loyalty in existing customers and attracting potential customers for BMW products showcased at the event. 3.7 These BMW events offer a....
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....lear distinction should be drawn between goods given as a gift and goods given on free of cost basis. As stated above, in the instant case, the Company organizes such marketing events with a sole intent of enhancing the loyalty of its existing customers and attracting potential customers which ultimately helps in increasing the sale of BMW products in India. 4.7 The applicant has relied upon an order of in light of the above, it is pertinent to highlight an order passed by the Hon'ble CESTAT, New Delhi in the case of Shree Cement Ltd. Versus Commissioner of Central Excise & Service Tax, Jaipur-II = 2014 (8) TMI 250 - CESTAT NEW DELHI where the assesse, a manufacturer of clinker and cement availed input tax credit on event management service. Thus, goods supplied by the Company during marketing events as prizes, memento's etc on free of cost basis, are for advertisement, sales and promotion of the Company's products and are not in the nature of a gift. 4.8 In view of the above discussion, the applicant contends that since the present case entails supply of goods/ accessories by the Company to its customers on free of cost basis during marketing and sales promotion events as an....
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....f section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following: (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples." 6.5 The applicant has claimed that the items distributed by it in the promotional events do not fall under the category of gifts. In support of its claim, the applicant has relied upon the definition of gift as contained in Gift Tax Act. 6.6 Section 2(59) of the CGST/SGST Act defines input as "any goods other than capital goods used to intended to be used by a supplier in the course of furtherance of business." section 2 (62) defines input tax in relation to a registered person which 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". 6.7 The term business is defined under section 2(17): (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (....
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....ent or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; 6.11 A careful reading of this definition suggests that the consideration could be monetary as well as non-monetary. This payment can be in advance or after the supply has been made. This payment may be made by the recipient or by any other person. A consideration may be the monetary value of any act or forbearance i.e. the monetary value of doing something or refraining from doing something. But this payment made or to be made or any such act or forbearance must be in respect of or in response to or for the inducement of the supply of goods and services or both. 6.12 The applicant has contended that the goods supplied by it in the marke....