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TMI Blog2019 (10) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of business, It is an admitted fact that the applicant herein purchases the items to be disposed as gifts under various incentive schemes to dealers/ painters etc. Therefore the applicant is not entitled to avail ITC on such items. Circular No.92/11/2019-GST dated 07.03.2019, issued by the CBIC, wherein, at para (A)(ii), it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration In the instant case the applicant offers free foreign / local trips, as incentives, to the dealers / painters etc., without any consideration. Therefore the input tax credit on the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that they are into the business of manufacturing decorative paints meant for interiors as well as exterior surfaces and have three manufacturing plants at Peenya, Bengaluru to cater the market needs from time to time. The manufactured paints are marketed through their sales offices spread across in Southern and Western India. b. The applicant submitted that like any other industry, Paint Industry (i.e. the applicant company in particular) always has to face the heat of macroeconomic factors to sustain in the industry as an ongoing concern. Small scale industries also have to face competition from giants to market its produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh a painter then details of such painter is tracked through a scheme called Painter Scheme . Once in a given period, the points accumulated by each of the painters are computed and compensated them suitably (according to their liftings) by way of giving them promotional items as indicated above. f. The applicant also explained that they also have a Gold Scheme in which gold is given to dealers once the scheme is over as per actual sale in terms of targets fixed. The quantum of gold is specified in the incentive scheme in line with actual sales done by the dealers. g. The applicant states that they used to get the GST input tax and bills from Composition taxable persons for procuring the above mentioned incentive item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im the GST Input tax credit on the items purchased for furtherance of business. 5.4 The business/ transactions of the applicant are examined and observed that they supply paints, manufactured by them, to persons on discharging applicable GST thereon. The applicant is claiming input tax credit of tax paid on the raw materials and any other input materials/ capital goods. They also give incentives to motivate the dealers subject to fulfillment of terms laid down under various schemes, which are independent of the tax payable/ paid. 5.5 The applicant, in order to promote the business, gives incentives/ gifts to those persons who assist in the marketing of the products i.e. dealers, painters etc., in the form of goods and ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, at times the applicant also offers foreign and local trip schemes as incentives, for which they procure various tax suffered services. The free travel services so provided are without any consideration and hence do not qualify to be a supply in terms of Section of the CGST Act 2017 and Schedule 1 to the CGST/KGST Act 2017. 5.9 In this regard we draw attention to the Circular No.92/11/2019-GST dated 07.03.2019, issued by the CBIC, wherein, at para (A)(ii), it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration In the instant case the applicant o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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