ITC Restrictions Under Section 17(5)(h) of CGST Act: Key Clarifications and Contradictory Judgments

S.

No

Nature Of Supply

Whether ITC Available

Whether A Supply Under GST

Remarks

1

Free Samples And Gift

No

No

Covered by Circular No 92/11/2019-GST dated 07-03-2019. Also supported by following judgements:

• GRB Dairy Foods Private Limited [TS (DB)-GST- [AAAR (TN)-2022-227]. Tamil Nadu.
• Sanofi India Limited [TS-1328-AAAR (MAH)-2019-GSTa]. Maharashtra.
• Biostadt India Limited [TS-911-AAR-2018-NT]. Maharashtra.
• Surfa Coats (India) Pvt. Ltd. [TS-807-AAR-2019-NT]. Karnataka.

Divergent view taken in the case of Orient Cement Limited

TS(DB)-GST-AAR(TEL)-2023-951

AAR holds that the transaction is one of supply of goods to his dealers in exchange for consideration which is the "monitory value of the "act" of attaining a level of business indicted in the incentive scheme" and that Applicant is inducing his dealers/ stockiest to attain a particular level of business as a consideration for the goods to be supplied by him;

Date of judgement 30-09-2023

2

Buy 1 Get 1 Free Offer

Yes

Yes

It May Be a Composite Supply or Mixed Supply. Covered by Circular No 92/11/2019-GST dated07-03-2019

3

Discounts Including "Buy More Save More" Offers

Yes

Yes

Such Discounts Are Sometimes Shown On the Invoice Itself or Maybe a Part of Terms of an Agreement. Such Discounts Are Passed On by The Supplier Through Credit Note. Covered by Circular No 92/11/2019-GST dated07-03-2019

4

Secondary Discounts

Yes

Yes

Credit Note is issued for price difference. It Will Be Simply Financial Transaction. Covered by Circular No 92/11/2019-GST dated 07-03-2019

5

Finished Goods Lost In Fire Accident, Steel Scrap Sold In Open Market

No

No

Geekay Wires Limited TS(DB)-GST-AAR(TEL)-2023-857

ITC required To Be reversed On Inputs.

6

Allows ITC When Consideration Paid By Way Of Book Adjustment/ Setting-Off Book Debts

Yes

Yes

Senco Gold Limited Ts (Db)-Gst-Aar(Wb)-2019-472

7

ITC On Goods Supplied In Marketing Events

No

No

BMW India Private Limited TS(DB)-GST-AAR(Har)-2019-745

Ineligible

8

ITC- Reversal On Inputs For Inherent Loss During Manufacturing Process 'Misconceived'; Blocked Credit Provision Inapplicable

yes

Yes

ARS Steels And Alloy International Private Limited Vs. State Tax Officer TS(DB)-GST-HC(Mad)-2021-346

9

ITC On Inputs Consumed In Expired Cakes & Pastries Not Admissible;

No

No

Kanayalal Pahilajrai Balwani TS(DB)-GST-AAR (Guj)-2021-554

Requires Reversal

10

Denies ITC On Branch-Ho Inter-State Supplies Where Consideration Netted Off

No

No

Sanghvi Movers Limited. TS(DB)-GST-AAR(TN)-2019-549

11

No ITC Available For Construction Of Marriage Hall Used In Furtherance Of 'Renting' Business

No

No

Sree Varalakshmi Mahaal LLP. TS(DB)-GST-AAR(TN)-2019-247

12

Disallows ITC On Free Gifts/Trips Distributed To Dealers

No

No

Surfa Coats (India) Private Limited

TS(DB)-GST-AAR(KAR)-2019-668