TaxTMI 
TaxTMI 
2023 (12) TMI 820
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....1 dated 30.07.2021. 3. Briefly, the facts are enumerated below for ease of reference: 4. The appellant, is registered with the department & their GST registration no. is 24AAAAR2912F1Z0. 5. The State Government announced the "Atma Nirbha Gujarat Sahay Yojna" wherein Nagarik Sahakari Banks (including Banks registered under Multi State Cooperative Act) and Cooperative Credit Societies were to provide loans, without security upto Rs. 1 lacs to small traders, middle class businessman, individual artisans and working class, @ 8% interest. Out of this 8% interest, 2% interest was to be paid by the customer (loanee) while the remaining 6% interest was to be borne by the Gujarat State Government. 6. Further based on the performance of the Banks disbursing these loans, they were to be granted a one-time incentive by the State Government, depending on the total lendings done under the Atma Nirbhar Gujarat Sahay Yojna. This incentive was over and above the 6% interest borne by the State Government as mentioned supra. 7. On the belief that the 'incentive' so received under the scheme is akin to a 'subsidy' and hence is not leviable to GST, the appellant sought a ....
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....raging or Impelling while subsidy means Pecuniary aid directly granted by Government to an individual or private commercial enterprise deemed beneficial to the public; Any financial assistance afforded by one individual or government to another, • that payment made by either the Central/State Government as incentive or subsidy is nothing but the subsidy paid to achieve some object; • that they would like to rely on the following rulings/case laws viz • Rashmi Hospitality Services Pvt. Ltd. [KAR ADRG 61/2019 dated 20-09-2019] wherein it was held that any compensation or amount paid for implementation of government scheme should be treated as subsidy. The decision is squarely applicable in this case. • Ponni Sugars and Chemicals Limited [2008 (9) TMI 14] wherein the Hon'ble SC held that the purpose of payment by the Government is to allow subsidized loan to a specified class of persons and therefore any amount paid under the scheme should be considered as subsidy from the Government which is not liable to GST. • that the scheme announced by the Honorable Government is for the benefit of the public only and is not be....
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....m. 13. State Government will provide the Co-operative Banks/ Cooperative Credit Societies. 2% incentive [for one time only] on the total credit extended by them. 23. The amount of interest subsidy provided by the Co-operative Banks/ Cooperative Credit Societies will be reimbursed by the State Government on a quarterly basis. 26. No additional charge such as form fee, stamp duty and processing charge shall be levied by the Co-operative Banks/ Co-operative Credit Societies from the individuals availing such loans. 27. In case loans are advanced to persons who are not members of Co-operative Banks/Cooperative Credit Societies no fees leviable as per the by-laws of the organization for making such a person a member, shall be charged from such loanees. 28. A Co-operative bank/ Co-operative Credit Society may, however take an advance cheque from the borrower to secure the loan and obtain a simple personal guarantor without collateral. 37. During the course of audit by the Comptroller & Auditor General (CAG), the records pertaining to these Yojana should be produced on demand. Resolution dated 20.06.2020 1. This scheme shal....
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....ct Cooperative Banks Ltd., all the Nagrik Sahkari Bank (including Banks registered under Multi State Cooperative Societies Act) who have given loan under the Yojana will be given a one- lime (for one time only) incentive on the total credit made by them under Atmanirbhar Gujarat Sahay Yojana-2 as follows. For loans upto Rs. 10 crores -2% For loans from Rs. 10 crores to Rs. 50 crores -2.5% For loans from Rs. 50 crores to Rs. 100 crores 3 % For loans above 100 crores 4% 12. As is already evident, we find that the sole contention of the appellant is that the amount received by them under the heading 'incentive' as mentioned in the State Government Resolutions, the relevant extract of which is reproduced supra, is akin to 'subsidy' and hence not leviable to GST. The appellants further contend that subsidy would also not form a part of supply u/s 7(2), ibid', that it is not taxable under Schedule-111 of CGST Act, 2017. The appellant has also relied upon the dictionary meaning of the word subsidy and incentive to drive home the point that both the words mean the same. 13. We find that the State Government Resolution, the copie....
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.... 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: Thus, the reliance of the appellant on various dictionary meaning to argue that both the words subsidy and incentive, mean the same, is not a plausible contention. 16. The next submission of the appellant is that the subsidy in the form of an incentive received is also not covered under the definition of scope of supply u/s 7(2), ibid', that even in terms of Schedule III of CGST Act, 2017, the payment received by the petitioners would not be chargeable to GST. Before addressing the argument, we would like to reproduce both section 7(2), ibid and schedule III. Section 7. Scope of supply. (1) ....................... (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Sch....
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....plained how incentive would fall within the ambit of section 7(2) or Schedule III. 17. The next argument of the appellant is that the scheme is for the benefit of the public and not beneficial to an individual or private commercial enterprise and therefore the amount being paid by the Government over and above reimbursement of 6% interest is nothing but 'subsidy'. The dispute here is not in respect of reimbursement of 6% interest to the beneficiary. However, to equate this subsidy of 6% granted to the loanee, as a part of relief measure announced by the State Government on account of the pandemic situation, with the incentive granted to the Cooperative Banks and Cooperative Credit Societies, which solely depended on the performance in disbursing loans, is not a prudent argument in the first place. This incentive granted based on the performance cannot be termed as a subsidy. Even otherwise, we find incentive granted to Cooperative that the GAAR has clearly held that this Banks/Cooperative Credit Societies granted no benefit to the loanees. This was one of the ground adopted by the GAAR to hold that the incentive was not a subsidy. We are in complete agreement with this f....
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....le and incorporeal has been held in Tata Consultancy Services Vs. State of Andhra Pradesh (2005) 1 SCC 308. Thus one time incentive earned proportionate to the total disbursements of loans, would not fall within the ambit of actionable claims so as to fall within the exclusion as per Sr. No. 6 of Schedule-Ill, which deals with the activities of transactions which are neither supply of goods nor a supply of services. 22. The appellant has further argued that the incentive paid by Government under the said scheme could also be considered as the compensation towards the interest since in general terms the banks are charging interest which is more than 8% but under this scheme were authorized to collect interest @ 8% only; that at best it can be treated as differential interest which is not chargeable to GST in terms of notification No. 12/2017-CT (R) dtd 28.6.2017, as amended. This argument, we find is not substantiated. Since it is not substantiated with facts as to what exactly was the rate charged for other borrowings outside the scheme, what was the rate charged by other Banks during the period under dispute etc., it is difficult to come to a conclusion as far correctness of....
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....cision is squarely applicable in this case. On examining the aforementioned ruling, we find that M/s. Rashmi had entered into an agreement with Deputy Commissioners of the Districts to provide hotel/restaurant services for the Indira Canteen through tender. For the restaurant services, M/s. Rashmi was collecting a specified amount from the beneficiaries based on daily menu. At the end of the month M/s. Rashmi was submitting a consolidated bill by showing the amount collected from the beneficiaries and subsidy available from the Government. The ruling was sought in respect of the said subsidy. However, we find that the ruling is not applicable to the present dispute primarily since unlike in this case, there was no incentive paid over and above the amount fixed to M/s. Rashmi. Even otherwise, in terms of Section 103 of the CGST Act, 2017, the aforementioned ruling is applicable only to M/s. Rashmi [the applicant] and the jurisdictional officer. O Ponni Sugars and Chemicals Limited [2008 (9) TMI 14] wherein the Hon'ble SC held that the purpose of payment by the Government is to allow subsidized loan to a specified class of persons and therefore any amount paid under t....