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No ITC of GST paid on procurement of promotional materials which are distributed to distributors and franchisees free of cost

May 12, 2021[2021] 127 taxmann.com 176 (AAAR-KARNATAKA)
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GST : Where appellant is engaged in manufacture, distribution and marketing of certain goods under brand name, input tax credit of GST paid on procurement of promotional materials which are distributed to distributors and franchisees free of cost cannot be availed by appellant as input tax credit.

• Goods procured on payment of GST which are disposed of way of gifts are barred from being eligible for input tax credit in terms of section 17(5)(h), even if they are used in course or furtherance of business, hence, promotional products/materials and marketing items used by appellant in promoting their brand and marketing their products can be considered as 'inputs' as defined in section 2(59), however GST paid on same cannot be availed as input tax credit in view of provisions of section 17(2) and section 17(5)(h)

• [Page Industries Ltd., In re [2021] 123 taxmann.com 31 (AAR - KARNATAKA) - Set aside]

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