Case Details: Karthik & Co., In re - [2025] 181 taxmann.com 596 (AAR-TAMILNADU)
Judiciary and Counsel Details
- C. Thiyagarajan & B. Suseel Kumar, Member
Facts of the Case
The applicant, a wholesale and retail dealer in paints and related products holding a franchise from principal paint manufacturers, submitted that it received non-monetary benefits, including free gifts, compliments, and tour packages, for itself and its customers who purchased the manufacturers’ products. The applicant stated that the manufacturers had deducted TDS under Section 194R of the Income Tax Act. It contended that the applicant was not required to raise any tax invoice for the benefits received and submitted that such transactions did not constitute a supply under the CGST Act. The matter was placed before the Authority for Advance Ruling (AAR).
AAR Held
The Authority for Advance Ruling (AAR) held that all conditions constituting a supply under the GST law were satisfied and that the non-monetary benefits received by the applicant constituted a supply of services taxable at the rate of 18%. The AAR observed that the applicant provided augmentation, and business support to the manufacturers by achieving the desired actions and targets as expected by the manufacturers. The AAR directed that the applicant shall raise a tax invoice for the benefits received, with the value of services determined based on the benefits recorded in the TDS certificate issued by the manufacturers, in accordance with Section 7 of the CGST Act.
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