The Maharashtra Appellate Authority of Advance Ruling (AAAR) has on the application filed by the M/s Sanofi India Limited {Order NO. MAH / AAAR / SS-RJ /10 /2019-20, dated 22.10.2019 } ruled that the ITC of GST is not available on free gifts distributed to wholesalers/distributors even though given for the furtherance of the business. The same was given as a free gift and as per the provisions of Sec.17 (5) (h) of the CGST Act, 2017, the input tax credit has been blocked on gifts. The Authority remarked as under :

“No doubt, the goods embossed with Sanofi distributed free has advertising potential and it is in the furtherance of the business. But it is also to noted that Section 17(5)(h) starts with a non-obstante clause where it overrides section 16 (1) of the CGST Act. The legislature has denied input tax credit on such goods. These goods are inputs but distributed as free gifts. Therefore ITC is not available as per section 17(5)(h).”

Important Note: The views expressed herein are personal. The above information is only for educational purposes and does not form professional advice. Kindly read law, circular, notification, judgement etc. before acting upon it. Further, though due care is taken while preparing the document, possibility of errors cannot be ruled out.

CA. Nikhil Kumar