TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 820
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....cts 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 ruling from the Gujarat Authority for Advance Rul....
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....o 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 beneficial to 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"; * that even assuming that t....
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....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 shall be known as Atma Nirbhar Gujarat Sahay Yojana-II. This Yojana will be effective from 01.07.2020. 2. The main target of the scheme is to provide subsidy for loans availed by small traders, middle class persons and individual artisans to enable them to accelerate their economic activities. 6. Persons can get benefit under this sch....
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....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 copies of which were enclosed with the appeal papers and the relevant extract of which is reproduced supra, emphatically show that the Government Resolution purposefully used two words one being ...... in vernacular, [the literal translation being 'vyaj sahay] which basically would mean interest subsidy while the other word being incentive, which even in the Government Resolution is mentioned in English language, though the text of the e....
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.... 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 Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. SCHEDULE III [See Section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 1. Services by an employee to the emp....
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....ic 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 finding of the GAAR. 18. An alternative plea raised in the appeal is that even if it is assumed that incentive is not a "subsidy", then it could be considered as payment covered under the definition of "Actionable Claim" since by complying with the conditions laid down under the scheme, the applicant had accrued his claim for the payment to be sanctioned by the Government. 19. Let us examine the above contention. 'Actionable claim' has been defined u/s 2(1) of the CGST Act, 2017 as under viz (1) "actionable claim" shall have the same meaning as assigned to it in section 3 of the Transfer of Pro....
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....ch 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 the submission is concerned. Had that been the case, the incentive given would have been constant/static and would not have varied with the increase in the level of disbursements of loans. Even otherwise, we find that the loans were advanced during a period when the country was going through pandemic which could have also had its effect on the market borrowings & consequently on the rates charged by the Banks. The scheme provided for incentives, meaning rewards, which varied based on performance. 23. In this regard to substantiate our view, we would like to rely on the case of Dilip Kumar & Company [2018 (361) ELT 577 (SC)], wherein the ....