The goods procured by BMW India and supplied during promotion/marketing events qualify as being used in the course of furtherance of business. The company is ineligible to avail Input tax credit for such goods supplied in the marketing events owing to the bar of clause (h) of sub-section (5) of section 17.
Authority for Advance Ruling — ITC of goods supplied for promotion of Sales – The applicant BMW India Private Limited has a manufacturing plant located at Chennai and a warehouse in Mumbai for after sales purposes. The applicant organizes various events across the year for the purpose of marketing and sales promotion of its products. The company incurs different type of expenses for organization of these events. These events are organized with an intention to increase its brand visibility, enhance loyalty for its existing customers and attract new potential customers. The existing customers are provided with exchange offers etc. The attendees are provided with BMW branded lifestyles accessories such as Duffle bags; Golf balls; T-shirts; Caps; Diary; Key chain; Passport holder etc. on a free of cost basis and these accessories are tailor made by way of embossing a BMW brand logo on the same. These expenditures incurred by the Company is recorded as sales promotion and marketing expense in the books of accounts. The applicant sought as to whether certain customized lifestyle goods procured by the applicant either from a third party local supplier or imported from outside India for supply of goods during promotion/marketing events organized by the Company will qualify as used in the course or furtherance of business in terms of the provisions of the Act; whether the Company is eligible to avail ITC for such goods supplied under the marketing events. The authority observed that the items distributed in the promotional events are gifts and section 17 (5) (h) bars credit of input tax with respect to gifts made by a registered person.
Held that:- The Hon’ble Authority ruled that the goods procured and supplied during promotion/marketing events qualify as being used in the course of furtherance of business in terms of Act. The applicant is ineligible to avail ITC for such goods supplied in the marketing events owing to the bar of clause (h) of sub-section (5) of section 17.
The goods procured by BMW India and supplied during promotion/marketing events qualify as being used in the course of furtherance of business. The company is ineligible to avail Input tax credit for such goods supplied in the marketing events owing to the bar of clause (h) of sub-section (5) of section 17.
Authority for Advance Ruling — ITC of goods supplied for promotion of Sales – The applicant BMW India Private Limited has a manufacturing plant located at Chennai and a warehouse in Mumbai for after sales purposes. The applicant organizes various events across the year for the purpose of marketing and sales promotion of its products. The company incurs different type of expenses for organization of these events. These events are organized with an intention to increase its brand visibility, enhance loyalty for its existing customers and attract new potential customers. The existing customers are provided with exchange offers etc. The attendees are provided with BMW branded lifestyles accessories such as Duffle bags; Golf balls; T-shirts; Caps; Diary; Key chain; Passport holder etc. on a free of cost basis and these accessories are tailor made by way of embossing a BMW brand logo on the same. These expenditures incurred by the Company is recorded as sales promotion and marketing expense in the books of accounts. The applicant sought as to whether certain customized lifestyle goods procured by the applicant either from a third party local supplier or imported from outside India for supply of goods during promotion/marketing events organized by the Company will qualify as used in the course or furtherance of business in terms of the provisions of the Act; whether the Company is eligible to avail ITC for such goods supplied under the marketing events. The authority observed that the items distributed in the promotional events are gifts and section 17 (5) (h) bars credit of input tax with respect to gifts made by a registered person.
Held that:- The Hon’ble Authority ruled that the goods procured and supplied during promotion/marketing events qualify as being used in the course of furtherance of business in terms of Act. The applicant is ineligible to avail ITC for such goods supplied in the marketing events owing to the bar of clause (h) of sub-section (5) of section 17.