Page 179 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] IN RE : MOKSH AGARBATTI CO. 137
In case the company fails to honour the
non-monetary discounts which were promised
to the distributor, the distributor can pull the
company to the Court. Hence, this is a contrac-
tual obligation and not a gift. Accordingly, the-
se appliances are not getting disposed of as
gifts but are being offered as part of the con-
tract and accordingly credit should be allowed
on the same
1 Agarbatti This is done to encourage purchase of full car-
Packet Free on ton boxes instead of cutting down the size of
purchase of one purchase. Purchase of one carton box also helps
Carton box of in reducing the various cost
Agarbatti 1. Packing Material is saved - else same
quantity will have to be packed in two dif-
ferent containers;
2. Admin Overheads can be avoided -
Counting, Re-packing, Re-labeling etc.
Further the cost of the free Agarbatti is al-
ready factored while determining the price
of the entire carton box and hence even in
this case, the products are not being of-
fered as gift and accordingly credit should
be allowed

(ii) Products given to dealers as non-monetary discounts are not sup-
plies since these are arising out of the prior contractual obligation
between the applicant and their distributor where former agrees to
offer latter, a discount based on the target achieved by the latter in
the form on issuing certain products. There is no supply of these
products as these are arising out of prior contracts and such offering
of products does not involve any fresh consideration.
(iii) Section 17(5)(a) does not allow credit on Motor Vehicles but does
not restrict credit on insurance and car servicing charges. Given that
the expenses are used in relation to business, the credit of the same
should be available to the applicant. Additionally, credit on life and
health insurance is specifically disallowed unless provided for un-
der any obligation under any law for the time being in force. But
credit on premium paid on motor vehicles is not expressly disal-
lowed and these are obtained under an obligation in law which
does not permit usage of motor vehicles unless insurance is ob-
tained on these vehicles. Accordingly, credit of taxes paid on insur-
ance premium related to motor vehicles should be allowed.
3. The Central Goods and Services Tax, Ahmedabad-South Commissionerate,
vide their letter F. No. IV/16-02/MP/2018-19, dated. 20-4-2018, gave their point-wise
comments which are as under :

GST LAW TIMES  7th May 2020  179