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No ITC on free supply of electric items to flood affected people of kerala under CSR expenses

Shanti Prime Publication Pvt. Ltd.

Authority for Advance Ruling — Taxability on goods provided free of cost- CSR expenses– The applicant, a dealer in electrical goods, cables of all kinds including winding wires, pipes etc had supplied electrical items to Kerala State Electricity Board through their distributors spread across the State in connection with reinstating connectivity in the flood ridden areas as part of the “mission reconnect”. The materials are supplied free of cost as a CSR activity. The applicant sought an advance ruling for (i) determination of GST liability with respect to goods provided free of cost by the Distributors of applicant for reinstating connectivity in flood ridden areas and admissibility of input tax credit in relation to such goods (ii)applicability of Sec. 17(5) of CGST Act, 2018 on CSR expenses.
Held that:- The Hon’ble Authority for Advance Ruling held that after the goods are supplied to State Electricity Board, the distributor would raise claim to the applicant who will reimburse the value to the distributor and the distributor would be entitled for ITC on the goods supplied. Further, the applicant distributed electrical items to flood affected people under CSR expenses on free basis without collecting any money. For these transactions ITC will not be available as per Sec. 17(5)(h) of the Act.—Polycab Wires Private Limited, In Re… [2019] 10 TAXLOK.COM 059 (AAR-Kerala)