The Maharashtra Authority of Advance Ruling ( AAR ) has held that incentives received for market services within India cannot be considered as Trade discount nor export service.
The applicant, M/s MEK Peripherals India Pvt Ltd., is a reseller of Intel products purchase from the various distributors of Intel Inside US LLC (IIUL). The products are imported by various distributors from IIUL and sold to applicant for further sale to various retailers.
The applicant entered into agreement with IIUL under Intel Authorized Components Supplier Program (IACSP) pertaining to a non-biding plan of Record Target (POR Target) under which the applicant will earn certain incentives directly from IIUL as a percentage of performance to quarterly goal on eligible Intel products. The applicant submitted that the incentives received from Intel should be considered as Trade discount as per Section 15 of the CGST Act, 2017 and it would not liable to tax.
The Authority observed that the in the absence of supply of goods between the concerned persons it appears that IIUL is paying consideration to the applicant for receiving market services which would augment the sale of Intel products in the country. Therefore, the said amount received by the applicant cannot be considered as Trade Discounts received.
The Coram of Mr. Rajiv Magoo (Central Tax) and Mr. T. R. Ramnani (State Tax) has held that “the marketing services are provided in respect of goods which are made physically available by the recipient of services (IIUL, through distributors) to the supplier of marketing services (applicant), in order to provide the services. Therefore, as per section 13 (3) (a), the place of provision of services is the location of the supplier of services i.e, the applicant, which is in India. Hence, we hold that the impugned supply does not qualify as export of services”.
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