販促品の供給には個別の税率が適用され、それに対する仕入税額控除（ITC）が認められます。

西ベンガル州事前裁定当局による裁定

M/S. KANAHIYA REALTY PRIVATE LIMITEDの件（2021年ケース番号12、2021年9月30日付）

M/S. KANAHIYA REALTY PRIVATE LIMITED（以下「申請者」）は、肌着やブリーフなどの靴下・肌着類を製造・供給する事業者である。申請者は販売促進のため、一定数量の靴下・肌着類を購入した小売業者に対し、金貨、冷蔵庫、セパレート型エアコンなどの販促品を割引価格で提供している。申請者は、以下の点について事前裁定を求めた。

1. 販促品の供給が「混合供給（Mixed Supply）」として課税されるか、あるいは個別の供給として課税されるか。
2. 販促品に対して支払った税額の仕入税額控除（ITC）は認められるか。

1. 供給の性質：

申請者は、靴下・肌着類と販促品の供給は、2つの条件を満たしていないため「混合供給」には該当せず、「複合供給（Composite Supply）」にも該当しないと主張した。当局は、両方の供給に対して個別の請求書が発行されていると判断した。両供給に対して単一の対価が請求されているわけではないため、「混合供給」には該当しない。さらに、両供給は自然に組み合わされたものではなく、相互に関連して行われるものでもない。したがって、当該供給は「複合供給」には該当しない。

したがって、靴下・肌着類と販促品の供給は個別の供給とみなされ、それぞれに適用されるGST税率が適用されるものとする。

2. 仕入税額控除（ITC）の適格性：

販促品は申請者の事業を促進するために供給されるものであり、事業の過程および推進のために行われるものと言える。さらに、販促品は無償ではなく名目上の価格で供給されており、贈答品には該当しない。したがって、第17条(5)(h)項に規定される制限は適用されず、申請者はITCを請求する権利を有する。

1. 事案の概要

• 申請者（M/S. KANAHIYA REALTY PRIVATE LIMITED）は、肌着やブリーフなどの靴下・肌着類の製造および供給事業を行っている。
• 靴下・肌着類の販売を促進するため、申請者はインセンティブ制度を導入している。この制度では、小売業者が一定数の靴下・肌着類を購入した場合、申請者はそれらとは無関係な商品を割引価格で提供する。ただし、小売業者は販促制度の下で提供される商品を購入しないという選択も可能である。
• インセンティブ制度の下で申請者が割引価格で販売する無関係な商品には、金貨、冷蔵庫、クーラー、セパレート型エアコンなどがある。
• 例として、靴下・肌着類を1300箱購入した小売業者は、セパレート型エアコンをわずか50インドルピーで購入する資格を得る。

2. Question before Hon’ble AAR

• 今般、販促制度に基づく商品の販売に関し、申請者はGSTの適用およびインセンティブ制度の下で提供される商品に対するITCの適格性について事前裁定を求めた。

• 以下の質問が提起された：

1. 靴下・肌着類と無関係な商品が別々の請求書と価格で販売されているという事実を踏まえ、名目価格で割引提供される無関係な商品の供給は、個別の供給（すなわち、当該商品に適用されるGST税率が適用される）として扱われるか、それとも混合供給（すなわち、最も高いGST税率が適用される）として扱われるか。
2. 当該無関係な商品に対して支払われた仕入税額の控除は、申請者に認められるか否か。

3. 関連する法的抜粋

参照用に、関連する法的規定を以下に転載する：

Section 17: Apportionment of credit and blocked credits

「(5) 第16条第(1)項および第18条第(1)項の規定にかかわらず、以下については仕入税額控除を認めないものとする：

…

(h) 紛失、盗難、破壊、廃棄された商品、または贈答品もしくは無料サンプルとして処分された商品。および

…”

第8条：複合供給および混合供給に対する納税義務

「8. 複合供給または混合供給に対する納税義務は、以下の方法により決定されるものとする：-

* * * * * * * * *

(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.”

As per Section 2(74),  “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration. - A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other.

It shall not be a mixed supply if these items are supplied separately;”

Definition of “Business” is given under Section 2(17) of CGST Act which is reiterated below:

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);

(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction…”

4. Submission of the Applicant

The applicant has submitted his case in detail with peculiarities along with the interpretation of the law.  Extraction of the submission made by the applicant are as follows:

1. Initially, the hosiery goods would be provided to the retailers under a separate Invoice on which GST is charged at applicable rate.
2. If the retailer qualifies the criterion of incentive scheme,  then unconnected goods offered under scheme, such as gold coins, refrigerator, mixer grinder, cooler, split air conditioner, etc,  are offered to such retailer at discounted/reduced price.  For sale of promotional goods, the applicant raises a separate invoice at a discounted rate.
3. However, the retailer has an option to buy such promotional goods, i.e., he may refuse if they do not want to buy.
4. The goods offered in the scheme are bought by the applicant from the open market. The applicant makes payment of GST charged on such invoices. 
5. Now, the applicant wants to avail Input Tax Credit of GST paid on purchase of such goods as per section 16 read with Section 17 of CGST Act.
6. The applicant submitted that the GST Authorities may consider promotional goods, offered at discounted price, as gifts and denies the credit on the same by virtue of Section 17(5)(h) of CGST Act.
7. Further, GST authority may also try to classify sale of hosiery goods and promotional goods as mixed supply as per section 2(74) read with section 8(b) of the CGST Act, 2017.
8. Mixed Supply or not

The applicant submitted the following reasoning and provisions in relation to considering the sale of promotional goods and hosiery goods as “mixed supply”:

• If the supply of promotional items and hosiery items are considered as mixed supply then it shall be considered as supply of such goods which attracts the highest rate of GST. In the given cases, supply of hosiery goods and split air conditioner will be considered as sale of split air conditioner as it attracts a GST rate of 28%.
• Further, both supplies are separate as supply of promotional item would be subsequent to supply of hosiery goods once criteria of purchase of hosiery goods are qualified. 
• Any supply would qualify as “mixed supply” under Section 2(74) of CGST Act only when it qualifies the following conditions cumulatively:
  • There must be two or more individual supplies or combinations of such supplies made in conjunction with each other.
  • The said supplies must be made for a single price.
  • The said supplies must not qualify as a composite supply.
• As per the above conditions mentioned in above points should be met cumulatively to be qualified as ‘mixed supply’. It means only fulfilment of one or two conditions will not be sufficient to call the supply as mixed supply.
• The applicant submits that none of the criteria mentioned above are met in the present case. 
• In the given case, very first condition, i.e., supply of two or more individual supplies or combination of such supplies are made in conjunction with each other, of mixed supply is itself not qualified on following grounds:
  • Applicant argues that the supply of hosiery goods and promotional goods are individual supplies because the supply of promotional scheme goods will take place only after the criteria of purchase of hosiery goods is met.
  • Hosiery goods and promotional goods can not be made together; rather the supply of promotional goods depends on the criterion to be fulfilled by retailers. Supply of promotional goods would be contingent upon supply of hosiery goods.
  • Further, supply of promotional goods does not necessarily take place. Only If retailer opts to buy promotional goods then only sale of such goods would trigger. 
  • Therefore, the very first condition of supply made “in conjunction with each other” is not met. 
• Second condition,i.e., supply must be made for a single price, is also not qualified in the given case. In the present case, supply is made for two different prices therefore it does not qualify as a ‘mixed supply’. The applicant also contended following points:
  • The applicant relied on precedence of In Re: Columbia Asia Hospitals Pvt. Ltd, 2019 (20) GSTL 154 (AAR-GST) in relation to mixed supply. In this case, Hon’ble AAR held that:
    • Where two or more goods/services do not make a composite supply but are still supplied for a single price, then they would make a mixed supply and be taxed as per section 8 of CGST Act 2017.
    • Where supplies of medicines, food and drinks and healthcare services, are not supplied in a single price and form separate and independent supplies then such supplies are taxed separately ar the applicable rate.
  • Therefore, relying on precedence of Columbia Asia Hospitals Pvt. Ltd, 2019 (20) GSTL 154 (AAR-GST), the supply of the hosiery goods and supply of said goods are for different prices and the invoices are raised separately for them. Hence, it is not covered under the mixed supply of goods.
• The applicant discusses the fulfilment of the third condition,i.e., the supply under discussion must not qualify as “Composite Supply”, as follows:
  • Term “Composite supply'' is defined u/s 2(30) of CGST Act  as two or more taxable supplies which are made in conjunction to each other and are naturally bundled in the course of business and one of the supplies is a principal supply. 
  • In the present case, the applicant submitted that the supply of promotional goods and hosiery goods would not qualify as a ‘composite supply’ as they are not supplied “in conjunction with each other” and they are not naturally bundled in the ordinary course of business.
• In the given cases, only one of the three conditions of “Mixed Supply” are qualified and other two conditions are not fulfilled. Therefore, the supply of promotional goods and hosiery goods do not qualify as “Mixed Supply”.
• Supply under discussion is neither “composite supply” nor “Mixed Supply”. Therefore, both supplies are to be treated as individual supplies and applicable rate of GST should be charged.

9. Admissibility of Input Tax Credit.

With respect to the issue of Admissibility of ITC on purchase of a promotional item, the applicant makes the following submission:

• As per section 16(1) of CGST Act, the registered person is entitled to take credit of any input tax charged to him on the supply of goods or services which are used or intended to be used in the course or furtherance of business. Therefore, important condition for claiming ITC is that such goods must be used “in course or furtherance of business”.
• Phrase business is defined u/s 2(17) of CGST Act which is reiterated above for reference. Term “Business” is defined in the widest possible manner to include any form of activity, trade or adventure. The sale of promotional goods at a discounted rate is carried out to promote sale of hosiery goods. Therefore, such sales would undoubtedly qualify as an activity which is incidental and undertaken in the course or furtherance of business.
• Further, ITC may be inadmissible under Section 17(5)(h) of CGST Act by classifying sale of promotional goods as “Gifts”. Term “Gift” is not defined under CGST Act. Therefore, reference should be given to definitions provided under any other statute. As per definition of gift given under Gift Tax Act, 1958, any particular thing would qualify as “Gift” only if the same is given voluntarily and without any consideration. Same essence of gift is also provided by Hon’ble Supreme Court in the matter of Naramadaben Maganlal Thakker v Pranjivandas Maganlal Thakker & Ors, 1997 (2) SCC 255. 
• In the given case, the applicant is not providing promotional goods on free of cost basis rather a nominal amount of consideration is charged for same. Therefore, inadmissibility given u/s 17(5)(h) is not applicable to promotional goods and the applicant is entitled to claim ITC.

5. Observations & Findings of the AAR

The Hon’ble AAR has made following observations and findings in the given case:

• Determination of Nature of Supply
  • On the issue of determination of nature of supply, “mixed supply” and “composite supply” are mutually exclusive, i.e., conditions provided for composite supply must not be present in mixed supply.
  • As per the scheme of applicant, hosiery goods would be sold first under a separate invoice and once the retailer meets the eligibility criteria, the promotional goods are sold under a separate invoice. So, the supply of hosiery and promotional goods are not “made for single price” and accordingly, such supply does not meet the second condition of “Mixed Supply”.
  • Therefore, such supply is not a “Mixed Supply”.
  • With respect to qualifying such supply as “Composite Supply”, supply of hosiery goods and promotional goods supply is not naturally bundled and also not supplied in conjunction with each other. Therefore, it does not qualify as “Composite Supply”.
  • Therefore, supply of hosiery goods and promotional goods would be considered as individual supply and applicable rate of GST would apply.

• Admissibility of ITC on promotional items
  • With respect to admissibility of ITC of tax paid on promotional items, contention of the applicant that promotional goods are provided to enhance sales and therefore, same can be said to be in the course or furtherance of business.
  • Also, promotional goods are provided for nominal consideration and therefore, same has not been provided on free of cost basis and can’t be termed as “Gift” and accordingly, inadmissibility given under section 17(5)(h) of CGST Act is not applicable.
  • However, value of supply of promotional goods shall be determined as per Section 15 read with Rule 27 of CGST Act as price is not the sole consideration for the supply.

6. Conclusion

1. Supply of promotional goods to retailers for nominal value if they qualify the retailers to buy certain amounts of hosiery goods would qualify as individual supplies and shall be taxable as per the rates for their individual category.
2. Credit shall be allowed to be taken on the items sold for nominal amount.