Page 178 - GSTL_7th May 2020_Vol 36_Part 1

136 GST LAW TIMES [ Vol. 36
(iv) The taxpayer has purchased motor vehicle for transport of Director
and Employees. Can credit of insurance and maintenance of these
motor vehicles be availed as credit?
2.1 Statement of relevant facts, submitted by the applicant, having a
bearing on the questions raised :
(i) With respect to Question 1 to 3, the applicant submits that no prod-
uct is given free of cost. The prices of these products are already fac-
tored in the final price charged from the distributor. The Agarbatti
Market is price sensitive and brand recall value is very less. The ap-
plicant offers freebies and gifts to distributors to ensure that the dis-
tributor offers the applicant product to end customer and thereby
increase the sales. Thus, this is only a marketing gimmick to ensure
that distributors are encouraged to sell the products of applicant in
preference to other company products.
(ii) Another typical problem faced in Agarbatti Market is the fact that
value discounts are not passed on to the customer. To ensure that
these are passed on to the end customer, we are forced to issue dis-
counts in the form of offering Dhoop with Agarbatti instead of re-
ducing the price of the Agarbatti.
2.2 Statement containing the applicant’s interpretation of law and/or facts, as
the case may be, in respect of the aforesaid question(s) (i.e. applicant’s view point and
submissions on issues on which the advance ruling is sought):
(i) Section 17(5)(h) of the CGST Act, 2017 restricts credit on goods dis-
posed of by way of gift or free samples. In this regard, the applicant
wishes to submit the following :

Credit on Dhoop Gifts are voluntary in nature and are not linked
offered free with to any purchase of goods by the recipient. In
Agarbatti Packets the instant case, Dhoop is offered only to recip-
ients who purchase the Agarbatti. There is a
direct link between Agarbatti purchased and
Dhoop offered free to the distributors. Accord-
ingly, credit of the same should be available
irrespective of whether these are manufactured
or procured from a third party
Target based Target based non-monetary discounts are
non-monetary issued based on the schemes floated in advance
discounts on during the year. The distributor pushes the
achieving specific sales of the product based on the incentive he
target would receive by achieving certain quantity of
sales. Instead of offering monetary discounts
which do not have a lasting impact, a non-
monetary discount in the form of kitchen ap-
pliances are given to distributors which have a
lasting effect. These are not fresh supplies but
obligations arising out of a predetermined
commitment

GST LAW TIMES  7th May 2020  178