No ITC Reversal on Demo Sample Products: Kerala AAR

The applicant, M/s Dynamic Techno Medicals Private Limited, manufactures and markets different health aid products, including Comprezon (Varicose Vein Stockings), Elnova (Surgical Lumbo Sacral Corset), New Mom maternity pad, Topgrip (Compression Bandage), Easyfix (Clear ECІ Cannula Fixator), etc.

As per the applicant, their products are new in the market, and the applicant provides them with demo samples. These samples help the customers to experience the features and quality of the products. These demo samples are not sold for any consideration, and the GST is not payable on such dispatches.

The applicant filed an application before the Kerala Authority for Advance Ruling (AAR) to get an advance ruling for the following questions:

“1. Whether products issued for demonstration by a product specialist for marketing are to be treated at par with “Physicians Sample-Not for Sale” – for the purpose of procedural compliance of GST laws and procedures?

2. Whether any reversal of ITC is to be made for items issued for the purpose of demonstration by the Product Specialists, by treating it at par with the issue of a physician sample?”

As per the Kerala AAR:

• The demo products cannot be treated as “Physicians’ Sample-Not for Sale“.
• The reversal of Input Tax Credit (ITC) is not required for the demo products.