Page 46 - GSTL_11th June 2020_Vol 37_Part 2

J54 GST LAW TIMES [ Vol. 37
money as is equivalent to the consideration not in money, if such amount is
known at the time of supply. If the value of supply is not determinable as stated
above, the value of supply of goods or service or both of like kind and quality.
Rulings
Determination of GST liability with respect to goods provided free of
cost by the distributors of M/s. Polycab Wires Private Limited to KSEB for rein-
stating connectivity in flood ridden areas; and admissibility of input tax credit in
relation to such goods.
(i) In order to operationalize the commitment of the applicant to pro-
vide goods at free of cost to Kerala State Electricity Board for flood
renovation work, the applicant instructed its distributors to provide
the goods. The distributors billed the goods to Kerala State Electrici-
ty Board and paid GST to Government. In the invoice so issued, the
distributor had valued the goods for the purpose of tax and value
was shown as discount. In this supply, since the consideration is not
wholly in money, Rule 27 of the CGST/KSGST Rules would apply
for valuation. After the goods are supplied to Kerala State Electrici-
ty Board, distributor would raise claim to the applicant who will re-
imburse the value to the distributor. This being the case, the distrib-
utor would be entitled for input tax credit on the goods supplied to
Kerala State Electricity Board on instructions from the applicant.
(ii) Applicability of Section 17(5) of CGST Act, 2017 on CSR expenses.
Therefore, the applicant distributed electrical items like, switches, fan, cables, etc.,
to flood affected people under CSR expenses on free basis without collecting any
money. For these transactions input tax credit will not be available as per Section
17(5)(h) of the KSGST and CGST Acts.
Before parting
Thus, the eligibility of ITC, only condition is required that to satisfy the
provision under Section 16(1) of the CGST Act, thereby expenses incurred for
procuring of goods and services which are intended to be used in the course or
furtherance of business and input tax credit should not be blocked by sub-
sections listed under Section 17(5) of the CGST Act, 2017. The provision of
blocked credit as provided under GST law needs further clarification in respect
of CSR expenses incurred by the big corporate houses otherwise such condition
and restriction of ITC on CSR expenses may disappoint to corporate houses in
the country. It is hoped that GST Council should suitably recommend the
amendment of provision of blocked credit so that corporate houses can enjoy the
benefit of ITC on CSR expenses in the coming days.

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GST LAW TIMES  11th June 2020  46