No GST leviable on extra packs of cigarettes supplied as part of promotion scheme for same consideration

For reasons as discussed in the body of the order, the questions are answered thus –

The Applicant is seller of Cigarettes, and intends to offer extra quantity of Cigarettes (quantity discount) in addition to normal quantity against same consideration, as a taxable supply to its Distributors from their Depot.

As per new marketing strategy devised by the Applicant to promote its brands and also to increase its turnover the Applicant proposes to distribute/promote some of their brands/products in the market, thru their Distributors. The price range of these cigarettes of a pack of 10 will be in the range of Rs. 501-to 200/-(depending upon the brand). MRP will be printed on each pack of Cigarettes. However, as marketing strategy to counter competition, instead of supplying a quantity of say 100 packs for an agreed price of say Rs.5000/-they would be supplying 110 packs of Cigarettes without recovering any additional cost from the Distributors. The Applicant would be paying GST and Compensation Cess on Rs. 50001-at applicable rate.

Question (i) :-In the above transaction, whether the extra packs of Cigarettes would again be leviable to GST

Answer:-Answered in the negative in view of the discussions made above.

Question (ii):-If yes, the taxable value which can be attributed to such extra packs of Cigarettes for levy of GST

Answer :-Not answered in view of answer to Question No. 1 above.

Question (iii):-Whether extra packs of Cigarettes would be considered as exempt supplies or free samples and hence attract the provisions of Section 17 (2) of the CGST Act, 2017 read with Rule 42 of the CGST Rules, 2017 or clause (h) of Section 17 (5) of the CGST Act, 2017

The extra packs of Cigarettes will not be considered as exempt supplies or free samples and hence the provisions of Section 17 (2) of the CGST Act, 2017 read with Rule 42 of the CGST Rules, 2017 or clause (h) of Section 17 (5) of the CGST Act, 2017 will not be applicable.

Download