2025-VIL-197-AAR
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SGST Advance Ruling Authority

GST - Tamil Nadu AAR - Non-monetary benefits received by a dealer as consideration for promoting sales - The applicant is a wholesale and retail dealer for paints and related products who obtained a franchise from paint manufacturers. The manufacturers provided the applicant with non-monetary benefits in the form of free gifts, compliments, and tour packages for the applicant and its customers (painters) who bought their products. The manufacturers deducted TDS under Section 194R of the Income Tax Act on the value of these non-monetary benefits. The applicant raised tax invoices for the value of the non-monetary benefits and charged CGST and SGST. However, the manufacturers were of the view that the applicant need not raise any tax invoice as such transactions are not considered "supply" under the GST Act - Whether the tax invoices raised by the applicant for the non-monetary benefits/perquisites received are valid under the GST Act - HELD - The tax invoices raised by the applicant are valid under the GST Act. The non-monetary benefits received by the applicant are considered "consideration" for the "supply of support services" rendered by the applicant to the manufacturers in the form of sales promotion and augmentation. The transaction between the applicant and the manufacturers falls within the definition and scope of "supply" under Section 7 of the CGST Act - the tax invoices raised by the applicant are valid under the GST Act, and the value on which TDS is deducted under Section 194R of the Income Tax Act should be considered as "supply" under the GST Act. The applicant is required to issue invoices for the "supply of support services" and can charge GST inclusive of tax for the consideration received in the form of gifts/perquisites/tour packages – Ordered accordingly - Whether the value on which TDS is deducted under Section 194R of the Income Tax Act should be considered as "supply" under the GST Act - HELD - The value on which TDS is deducted under Section 194R of the Income Tax Act should be considered as "supply" under the GST Act. Since TDS is deducted on the value of the non-monetary benefits received by the applicant, the value of such gifts/perquisites/tour packages is income to the applicant for the services rendered and hence, should be considered as "supply" under the GST Act.
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