The Uttar Pradesh Appellate Authority for Advance Ruling (AAAR) has held that Goods and Services Tax is not leviable on extra packs of cigarettes supplied along with regular supply.
The respondent, M/s Golden Tobie Private Limited is engaged in the business of manufacturing, marketing, and distributing cigarettes. The goods are manufactured outside the state and later transferred on a stock transfer basis after payment of 28% GST and Compensation Cess. To grow the business, the respondent has launched a new sale scheme wherein they will be supplying extra packs of cigarettes along with the regular supply quantity without receiving any extra consideration for that additional supply.
Accordingly, to ascertain the tax liability on the additional quantity of cigarettes, the respondent had filed an advance ruling, before the Advance Ruling Authority, Uttar Pradesh and AAR held that the extra packs of cigarettes would not be leviable at GST. Aggrieved by the ruling the Deputy Commissioner, CGST, and Central Excise filed an appeal before the Appellate Authority of Advance Ruling (AAAR).
The appellant submitted that since cigarettes are not subject to ad-valorem taxation but rather it is subject to specific taxation of a quantity-based system, therefore any ruling passed without considering all the aspect is bad in law
The Appellate Authority observed that the Authority for Advance Ruling can give its ruling on the question specified under sub-section (2) of Section 97 of the Act, concerning the tax levied under the Act. If any particular commodity attracts tax/cess, levied under any other statutory Act/ Rules then the advance ruling will be restricted to the tax portion levied under the CGST Act, 2017 only.
The advance ruling can only be rejected if the issue raised in the application has already been pending or decided in any proceedings in the case of an applicant under any of the provisions of the Act. The Appellant nowhere objected that the questions raised in the advance ruling application of the respondent are already pending or decided in any proceedings in the case of an applicant under any of the provisions of the Act.
The Coram of Mr. S. Kannan (Central Tax) and Smt. Ministhy S (State Tax has held that “we hold that the ORDER No. UP/ADRG 84/2021 dated 18.10.2021 issued by the Authority for Advance Ruling, Uttar Pradesh is proper and needs no interference”.
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