促销品的供应按其各自税率征税，且可就此抵扣进项税额（ITC）。

由西孟加拉邦预先裁定局（Authority of Advance Ruling）裁定

关于 M/S. KANAHIYA REALTY PRIVATE LIMITED 一案（2021 年第 12 号案件，日期：2021 年 9 月 30 日）

M/S. KANAHIYA REALTY PRIVATE LIMITED（申请人）是一家针织品（如背心、内裤等）的制造商和供应商。为促进销售，申请人向购买指定数量针织品的零售商以折扣价提供促销商品，如金币、冰箱、分体式空调等。申请人就以下事项寻求预先裁定：

1. 促销商品的供应应被视为“混合供应”还是单独供应。
2. 促销商品所缴纳税款的进项税额抵扣（ITC）是否允许？

1. 供应性质：

申请人主张，针织品与促销商品的供应不属于“混合供应”，因为不满足其中两项条件，且也不属于“组合供应”。荣誉预先裁定局（AAR）裁定，两项供应均开具了单独的发票。由于两项供应并非收取单一对价，因此不符合“混合供应”的定义。此外，两项供应并非自然捆绑，也非相互结合提供。因此，此类供应不符合“组合供应”的条件。

因此，针织品与促销商品的供应应视为单独供应，并适用相应的商品及服务税（GST）税率。

2. 进项税额抵扣（ITC）的合规性：

促销商品是为了提升申请人的业务而提供的，因此可以说是在业务过程中及为了促进业务而进行的。此外，促销商品是以名义价格而非免费提供，不能归类为赠品。因此，第 17(5)(h) 条规定的限制不适用，申请人有权申请进项税额抵扣。

1. 案情简介

• 申请人（M/S. KANAHIYA REALTY PRIVATE LIMITED）从事针织品（包括背心、内裤等）的制造和供应业务。
• 为促进针织品销售，申请人实施了一项激励计划。在该计划中，当零售商购买一定数量的针织品时，申请人会以折扣价向其提供不相关的商品。然而，零售商可以选择不购买促销计划下提供的商品。
• 申请人在激励计划下以折扣价出售的不相关商品包括金币、冰箱、冷风机、分体式空调等。
• 例如，购买 1300 箱针织品的零售商有资格以 50 卢比的价格购买一台分体式空调。

2. Question before Hon’ble AAR

• 目前，关于促销计划下的商品销售，申请人就 GST 的适用性以及激励计划下所提供商品的进项税额抵扣合规性寻求预先裁定。

• 提出了以下问题：

1. 鉴于针织品和不相关商品是在单独发票上以不同价格出售的，以名义价格折扣供应不相关商品应被视为单独供应（即适用该不相关商品对应的 GST 税率），还是应被视为混合供应（即适用最高的 GST 税率）？
2. 申请人是否可以获得此类不相关商品所缴纳进项税的抵扣。

3. 相关法律摘录

相关法律条款摘录如下，供参考：

Section 17: Apportionment of credit and blocked credits

“(5) 尽管第 16 条第 (1) 款和第 18 条第 (1) 款有任何规定，但以下情况不得抵扣进项税额，即：-

…

(h) 丢失、被盗、销毁、核销或以赠品或免费样品方式处置的商品；以及

……”

第 8 条：组合供应和混合供应的纳税义务

“8. 组合供应或混合供应的纳税义务应按以下方式确定，即：-

* * * * * * * * *

(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.