The Tamil Nadu Authority of Advance Ruling (AAR) ruled that the Input Tax Credit (ITC) cannot be claimed on GST paid on inputs services procured to implement promotional schemes under ‘Buy n Fly’.
The applicant, GRB Dairy Food Pvt. Ltd. has been engaged in the business of manufacture and supply of ghee and other products. They have their factory premises at Tamil Nadu and Karnataka having separate GST registration in both the States. The product groups of the applicant are classified into ghee, masalas. instant mixes and sweets. The products supplied by them are taxable under the Act and none of the products are either “Exempted” or “Nil rated”. They sell their products through various retail stores across the country and obtain substantial revenue from Export Sales too. With the objective of expanding the market share. the applicant launched a sales promotional offer to enhance sales of its products. The sales promotional offer was named as ‘Buy n Fly scheme. The scheme was valid from 80 April 2019 to 8th July 2019. This scheme is applicable for sales of Instant Mix, Masalas, ready to cat sweets and snacks. In other words, based on the quantity and value purchases made by retarers from sub stockists, the rewards fixed under the scheme would be awarded by the company to retailers.
Source Taxscan
