TaxTMI 
TaxTMI 
2021 (8) TMI 738
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicant has submitted that after disbursement of loan to the beneficiaries, they had forwarded the claim for incentive/subsidy through the office of District Registrar, Co-operative Society, Rajkot and after considering the said claim, the Govt. of Gujarat has sanctioned incentive to the tune of Rs. 9,24,28,936/- 3. The applicant has submitted that the subsidy received in the form of incentive cannot be considered as consideration under the provisions of Section 2 (31) of CGST Act. Section 2 (31) is reproduced as under : (31) "consideration in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, 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; (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 Gov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicant has submitted that subsidy as explained in the book, The Law Lexicon published by Lexis Nexis, 4th edition, 1st reprint 2019 is as : Subsidy- An aid, tax or tribute granted to the king for the urgent occasions of the kingdom, to be levied on every subject of ability, according to the value of his lands or goods. Money contributed by a state government, institution or person in behalf of any special object. 8. The applicant has submitted that any payment made by either the Central Govt or State Govt. as incentive or subsidy is nothing but the subsidy paid by the Government to achieve some object is subsidy and therefore in terms of the provisions of Section 2(31) read with Section 7 (2) of CGST Act, 2017, GST would not be applicable. 9. The applicant has relied upon the ruling of Hon'ble Authority of Advance Ruling, Karnataka in the case of M/s. Rashmi Hospitality Service Pvt. Ltd. {Order No. KAR ADRG 61/2019 dated 20.09.2019} wherein it has been held that the payment made by the govt. would not be treated as consideration and would be out of the purview of GST. 10. The applicant vide their letter dated 13-7-21 has submitted the additional submission where....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tely a Civil Court recognizes. 10.5 In view of the said definition and the fact that the applicant has accrued the actionable claim, the one-time payment given by the State Government could not be charge to Tax and therefore the amount under consideration may be held not to be chargeable to tax. Question on which Advance Ruling sought 1. whether the incentives received under "Atma Nirbhar Gujarat Sahay Yojna" dated 16.05.2020 declared by the Gujarat Govt. could be considered as subsidy and not chargeable to tax? 2. whether the incentive received under said scheme could be considered as supply of service under the provisions of Section 7 under CGST Act? 3. whether the incentive received under said scheme if considered as supply then would it be covered under Sub Section 2 of Section 7 of CGST Act? 4. whether the incentive received under said scheme could be considered as excluded from the value of taxable supply under clause (e) of Sub Section 2 of Section 15 of CGST Act, 2017. Revenue's Submission 11. The Revenue vide letter F. No. IV/16-20/Tech/2020-21 dated 7-5-21 has submitted as follows: 11.1 Services of extending deposit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....na scheme launched by the State Government. The main objective of said Sahay Yojana is to provide financial assistance in the form of loan to small businessmen, skilled workers, autorickshaw owners, electricians, and barbers, etc. Under the said scheme customers received the loan amounting to Rs. 1 lacs from the co-operative Bank @ 8% interest for three years. The recipient of the loan is liable to pay interest @ 2% on the loan amount and the remaining 6% interest is paid by the Gujarat Government to the applicant. 16.1 Further, the State Government under the said scheme has given the one time incentive @2%/4% to the applicant Bank on the total loan amount disbursed and the applicant received Incentive of Rs. 9,24,28,936. The relevant Para (13) of the scheme dated 27-8-21 issued by the Deputy Secretary, Govt. of Gujarat wherein it is mentioned that Co-operative banks will receive one time incentive on the loan amount disbursed as follows: * Up to Rs. 10 Crores --- 2% * Rs. 10 Crores to Rs. 50 Crores --- 2.5% * Rs. 50 Crores to Rs. 100 Crores --- 3% * More than Rs. 100 Crores ---------- 4% 16.2 The applicant has disbursed the loan amount mor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atment to be given to incentives given by Government. Government is treated as any other 'person' in GST law, but for relevant Notifications issued. We hold the said income of incentive 4% received by the applicant is consideration to the applicant. We are not satisfied to equate this incentive as subsidy granted by the Government. We hold that subsidy is granted in public interest, related with welfare of the public or provided to a person/business by Governments, to rationalise the cost impact directly/indirectly on the public. We find that the said incentive has no such bearing on reducing the interest burden of 2% on the customers of the applicant, but incentivising the applicant for its performance of business in said scheme. 19. The applicant relied upon the case law of Commissioner of Income tax, Madras Vs. Ponni Sugar & Chemicals Ltd. 2008 (9) TMI 14- SC. The facts of the referred case was that whether the incentive subsidy received by the assessee for repayment of loan is a capital receipt not includible in the total income and Whether the assessee was entitled to exemption under Section 80 P(2)(a)(i) of the Income Tax Act, 1961 in respect of interest received from the ....