GST payable on Supply of Unconnected Goods at a Nominal Price against purchase of Hosiery Goods: AAR [Read Order]

GST - Supply of unconnected goods - hosiery goods - AAR - Taxscan

The West Bengal Authority of Advance Ruling (AAR) ruled that GST payable on Supply of unconnected goods at a nominal price against the purchase of hosiery goods.

The applicant, Kanahiya Realty Private Limited intends to manufacture and supply hosiery goods such as Vests, Briefs, etc. The applicant further proposes to implement a scheme with the objective of incentivizing its sale of hosiery goods amongst the retailers whereby it would offer unconnected goods for sale at a discounted price to such retailers who have bought a certain unit of hosiery product from it as would be prescribed in its retail scheme circular. However, the retailers will be at liberty not to purchase the goods offered under the said promotional schemes.

The applicant has sought the advance ruling on the issue of Whether the supply of goods such as gold coins, refrigerator, mixer grinder, cooler, split air conditioner, etc. at a nominal price to retailers against the purchase of specified units of hosiery goods pursuant to a promotional scheme would qualify as individual supplies taxable at the rates applicable to each of such goods as per section 9 of the CGST Act or mixed supply taxable at the highest GST rate as per Section 2(74) read with section 8 (b) of the CGST Act, 2017, in light of the fact that the hosiery goods and good being sold at the nominal price is sold under separate invoices with separate prices.

Yet another issue raised was whether credit of the input tax paid on the items being sold at nominal prices (as indicated above) would be available to the applicant.

The coram of members Brajesh Kumar Singh and Joyjit Banik ruled that supply of goods at a nominal price to retailers against the purchase of specified units of hosiery goods pursuant to a promotional scheme would qualify as individual supplies taxable at the rates applicable to each of such goods as per section 9 of the GST Act.

“Credit of the input tax paid on the items being sold at nominal prices would be available to the applicant,” the AAR said.

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