Addl. bonus passed on by DCA to customer is not in nature of a GST supply : AAR

Addl. bonus passed on by DCA to customer is not in nature of a GST supply : AAR | Additional bonus passed on by the Del Creder Agent to customer is not in nature of a supply as per GST Act 2017.The transaction made between Del Creder Agent (DCA) and the Customer for passing on the specified bonus given by the principal is nothing but an additional discount given for early payment made by the customer. In this case there is only one supply made by the principal to the customer. The additional discount relates to supply already made by the principal and passing on such bonus to the customers by DCA is in the nature of pure agent. However, any amount retained by the DCA on account of early payment is in the nature of supply made to the principal as business support services on which the DCA is already paying GST.Below mentioned Questioned were referred to Authority of Advance Ruling Rajasthan.

Addl. bonus passed on by DCA to customer is not in nature of a GST supply : AAR

1. Classification of any goods or services or both; b. Applicability of a notification issued under the provisions of this Act;
2. Admissibility of input tax credit of tax paid or deemed to have been paid;
3. Determination of the liability to pay tax on any goods or services or both;
4. Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

  The Extract of Order ofAuthority of Advance Ruling Rajasthan is given below : 4 .5 We are of the view that the transaction made between Del Creder Agent (DCA) and the Customer for passing on the specified bonus given by the principal is nothing but an additional discount given for early payment made by the customer. In this case there is only one supply made by the principal to the customer. The additional discount relates to supply already made by the principal and passing on such bonus to the customers by DCA is in the nature of pure agent. However, any amount retained by the DCA on account of early payment is in the nature of supply made to the principal as business support services on which the DCA is already paying GST. When the reply of first question is in negative, there is no need to answer question No. 2, 3 and 4 of the applicant. 4.6 The applicant also sought clarification if GST is charged by the customer on invoice for such transaction, whether the dealer/DCA can take credit of the ITC of the GST charged on such supply considering the fact that dealer has outward supply as (i) Commission Agent Service on which GST is paid @ 18 % (ii) the Finance in terms of Loan and advance on which interest income arises which is exempt under CGST Notification No. 12 / 2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f 01.07.2017, as amended from time to time and corresponding Rajasthan GST Notification issued by Government of Rajasthan. In this regard we find that invoices can be issued by the supplier of the goods and services only. In the instant case, the customer is recipient of the goods supplied by the principal and any amount due to him can be adjusted by credit notes/ debit notes in relation to that supply. As the customer is recipient of the goods or services, he is not liable to issue invoices in respect of goods or services supplied by the principal. When there is no supply to DCA by customer, the DCA is not entitled to take ITC of GST passed on to the DCA in any manner. 5. In view of the foregoing discussion, we pronounce the ruling as under:-

RULING

1. The additional bonus passed on by the applicant (DCA) to the customer, is not in nature of a supply in accordance with GST Act, 2017. 2. Not applicable. 3. Not applicable. 4. Since, the said transaction is not a supply by the customer; invoice cannot be raised/ issued by the customer and if any amount passes on to the DCA in any manner, the DCA is not entitled to take ITC of the said amount passed on by the customer. Click here to download the advance Ruling

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