The Gujarat Authority of Advance Ruling (AAR) ruled that the incentives received under ‘Atma Nirbhar Gujarat Sahay Yojna’ attracts GST.
The applicant, M/s. Rajkot Nagarik Sahakari Bank Ltd. is a multi-state Schedule Co-operative bank. The State Govt. announced “Atma Nirbhar Gujarat Sahay Yojna” wherein Nagarik Sahakari Banks (including Banks registered under Multi-State Cooperative Act) and credit co-operative societies were to provide loans without securities up to Rs. 1 lacs to customers charging 8% interest. Out of this 8% interest, 2% interest portion was to be paid by the customer, and the remaining 6% interest portion was borne by the State Government. Further based on the performance of the respective banks, they would be allowed a one-time incentive amount depending on the total lendings done by the Banks under the said Sahay yojna.
The applicant has sought the advance ruling on the issues of whether the incentives received under ‘Atma Nirbhar Gujarat Sahay Yojna’ dated 16.05.2020 declared by the Gujarat Govt. could be considered a subsidy and not chargeable to tax, whether the incentive received under said scheme could be considered as supply of service under the provisions of Section 7 under CGST Act, whether the incentive received under said scheme if considered as supply then would it be covered under Sub Section 2 of Section 7 of CGST Act and whether the incentive received under said scheme could be considered as excluded from the value of taxable supply under clause (e) of Sub Section 2 of Section 15 of CGST Act, 2017.
The Coram of Members Sanjay Saxena and Arun Richard held that the subject incentive amount was liable to GST. The said Incentive is not a subsidy and does not merit exclusion from valuation under section 15(2)(e) CGST Act. The subject supply is covered at section 7(1)(a) CGST Act and not covered at section 7(2) CGST Act.
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