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The Profit Sharing Agreement between the applicant ad various shareholders of SHA is an actionable claim and is as neither a supply of goods nor a supply of services covered under Schedule III to CGST Act and SGST Act and hence is not taxable to CGST or SGST.

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Authority for Advance Ruling — Taxability on Profit Sharing Agreement – The applicant employed in Star Health and Allied Insurance Company Limited, as Chairman and Managing Director and also a Stake holder in the said company. The applicant sought an Advance Ruling, will the Profit Sharing Agreement between the applicant as an employee and the shareholders attract GST. The Applicant submitted that he is not rendering any services to any outsider nor is a registered dealer. He has entered into a Profit Sharing Agreement in which, he will get a profit for a strategic sale of equity shares over and above a specified sale price per equity share by a set of shareholders of SHA. The applicant submits that GST is not applicable on this profit sharing arrangement which will only arise from and out of his role as an employee of the company.
Held that:- The Hon’ble Authority for Advance Ruling held that the Profit Sharing Agreement between the applicant and various shareholders of SHA is an actionable claim and is as neither a supply of goods nor a supply of services covered under Schedule III to Act and hence is not taxable to GST.—Venkatasamy Jagannathan, In Re… [2019] 12 TAXLOK.COM 091 (AAR-Tamil Nadu)