GST Not Payable on Bank Rebates for Excise Duty Payments via Corporate Card: AAR

The applicant, M/s. John Distilleries Pvt. Ltd., is engaged in the manufacture of liquor, an activity falling outside the scope of GST. However, it is registered under GST for certain ancillary transactions such as royalty income, scrap sales, and GTA services under reverse charge.

The applicant obtained a corporate card from HSBC Bank to make payments towards excise duty. Based on the total payments made through the card, the bank provided a rebate calculated at a fixed percentage, which was adjusted against the outstanding balance. The applicant contended that such rebate was merely a financial adjustment and did not involve any supply of goods or services, thereby not attracting GST. Thus, an advance ruling was sought on the taxability of such rebate.

Issue Before Authority: Whether rebate received from a bank for payment of excise duty through a corporate card is liable to GST.

AAR’s Decision:  The Authority for Advance Ruling held that the rebate received by the applicant is not liable to GST. It observed that a valid “supply” under GST requires the presence of consideration and a corresponding quid pro quo. In the present case, the rebate was merely a post-transaction financial adjustment provided by the bank based on usage of the corporate card and was not linked to any independent supply made by the applicant.

The Authority further held that such rebate results only in reduction of the applicant’s monetary liability and qualifies as a transaction in money under Section 2(75) of the CGST Act. Since transactions in money are outside the scope of supply, no GST can be levied.

It also noted that the arrangement between the applicant and the bank is akin to a financial accommodation, where the rebate functions as a discount, which is otherwise exempt under the relevant notification. Therefore, the rebate was held to be outside the ambit of GST.

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