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TMI Blog2022 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ence meetings. 3. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 4. As per statement of facts submitted by the applicant- (i) The Applicant is engaged in the business of Trading of Animal Health Products. (ii) their product groups are classified into Antibiotic, Anthelmintic, and Analgesic & Antipyretic, Anti-Spasmodic, Ectoparasiticide, Feed Supplement, and Progesterone. (iii) The products supplied by them are both taxable and exempted under the GST Act. (iv) they sell their products through various retail stores across the country and obtain substantial revenue. (v) With the objective of expanding the market share, they launched some sales promotional offers to enhance sales of their products. (vi) The sales promotional offers are named as "BUMPER OFFER, WINTER BONANZA" etc. (vii) The current scheme is valid from 1St January 2022 to 31 St March 2022. (viii) This scheme is applicable for sales of health products related to animals. (ix) They provide fixed rewards to retailers under the schemes based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, they are awarded certain rewards as per the scheme. (vi) they are eligible to claim input tax credit in respect of procurement of input and input services of those products which are distributed to retailers as rewards because they procure these goods and services in the course of business and it has direct nexus with the business carried on by the company (vii) the products like Milton Double Decker lunch box, Electric Kettle, Iron, Ceiling Fans etc. procured by them will be used in course of business by way of handing over them as rewards to eligible retailers who participated in the scheme. (viii) In reference to the question, bundle of services is being offered to the delegates, reference to the concept of 'composite supply' under CGST Act, 2017 is required: (ix) "composite supply" means a supply 'made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with ordinary course of business, one of which is a principal supply; (x) As per the definition, the essential conditions for a supply to qualify as composite suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference & meetings. (xix) They placed reliance on the case laws of Ms. All Rajasthan Corrugated Board and Box Manufacturers Association (GST AAR Rajasthan) 6. The application for advance ruling was forwarded to the Jurisdictional GST Officer to offer their comments/views/verification report on the matter. The Deputy Commissioner, CGST Div I, Ghaziabad vide his letter C.No.V(30)/Tech GZB/D-1/AAR/16/2022/541 dated 13.05.2022 has submitted that- (a) the GST paid on inputs/input services procured for promotional scheme are not eligible for input tax credit under GST kaw on following grounds- (i) Section 17(5)(h) of the CGST Act, 2017 stipulates that the input tax credit is not available in respect of the following- Goods lost, stolen, destroyed, written off or disposed of by way of gift or fee samples (ii) the Circular No. 92/11/2019-GST dated 07.03.2019 clarified in Para (A)(ii) that "input tax credit shall not be available to the supplier on the inputs, input services and capitol goods to the extent they are used in relation to the gift or free samples distributes without any consideration. (iii) the AAR Karnataka vide Advance Ruling No. KAR ADRG 28/2019 in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions made by the applicant and have examined the explanation submitted by them. At the outset, we find that the issue raised in the application is squarely covered under Section 97(2)(d) of the CGST Act 2017 being a matter related to admissibility of input tax credit of tax paid or deemed to have been paid. We therefore, admit the application for consideration on merits. 10. We observe that the applicant has sought advance ruling on the issue- (1) Whether the GST paid on inputs/input services procured by us for promotional scheme are eligible for input tax credit under the GST law in terms of section 16 read with section 17 of the CGST Act, 2017? (2) Also, whether Input Tax Credit is admissible to us in respect of tax paid on i) Services provided by the hotel including accommodation, food & beverages. ii) Supply of food and beverages by outside caterers to our employees in respect of Business conference meetings. 11. We find that the applicant is engaged in the business of trading of Animal Health Products. The applicant have introduced sales promotional offers named as "BUMPER OFFER, WINTER BONANZA". Under the said scheme, they offer some free additional pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable as Input Tax Credit even when such goods/services are procured for furtherance of business. The said section starts with `Notwithstanding anything contained in sub section (1) of section 16'. If a provision contains a clause "notwithstanding anything contained in this Act" or "notwithstanding anything contained in some particular provision in the Act", the said clause is known as a non-obstante clause. This is always inserted at the beginning of a provision with the objective of giving the provision an overriding effect over the statute or provision mentioned in the non-obstante clause. It essentially means that in spite of the provision or Act mentioned in the non-obstante clause being in force, the provision that comes after that would be fully enforced without being restricted by the provision or Act mentioned in the non-obstante clause. 12.5 As Section 17 (5) contains a non obstante clause, which means even if Section 16 allows the credit, as conditions for taking of credit are satisfied, but Section 17(5) shall block the credit in respect of certain cases. Moreover, Section 17 (5) is a specific provision. It is an established principle that specific provisions pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Form GST ARA-01 and not on the sales made by the retailers. Moreover, the rewards are handed out to the successful retailers and no tax invoice/any taxation document are raised for such handout. Also, the goods are distributed on fulfillment of the conditions of the scheme, with no separate consideration, therefore, the distribution of goods and services to the retailers as per the Scheme is not a 'Supply' as defined under Section 7 of the CGST Act. Section 17 (5)(h) expressly restricts ITC on such gifts, even if they are procured in the course of furtherance of business. Therefore, it is clear that the tax paid on the goods procured for distribution as rewards extended by the applicant in the `Bumper Offer, Winter Bonanza' scheme or any other such scheme is not available to them as ITC in as much as such rewards have been extended as gifts on purchase of animal health products. 12.9. As such, the answer of the first question raised by the applicant in the application of advance ruling is negative in our view. 13. Now we proceed to examine the second question regarding admissibility of input tax credit in respect of tax paid on (i) Services provided by the hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the applicant is not entitled to the input tax credit in light of the express bar provided under Section 17(5)(b)(i) of the CGST Act, 2017. 13.5 We find that the applicant has placed reliance on the order of the Authority of Advance Ruling of Rajasthan in case of Ms. All Rajasthan Corrugated Board and Box Manufacturers Association (GST AAR Rajasthan. In the said case, the applicant was engaged in providing service in the form of technical Seminars, access to exhibition, hotel room Accommodation, cultural programs, lunch & dinner, airport Pick Up & Drop and a bundle of services were provided to the delegates and exhibitors of a composite supply having description 'Events, exhibitions, conventions and trade shows organizations and assistance services' and "Sponsorship services and brand promotion services" and for providing outward supply of said services, the inward supply of Services provided by the hotel including accommodation, food & beverages, and Supply of food and beverages by outside caterers were used by the applicant. As such, the facts of the said case are entirely different and not applicable to instant case. 13.6 As such, the answer of the second question ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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