GST Daily
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The Central Government had granted 100% Central Excise Duty exemption to units in Uttrakhand and Himachal Pradesh by issuing a notification in 2003 in the pre-GST era. However, after the implementation of GST w.e.f. 1-7-2017 by invoking its powers under the proviso to section 174(2)(c), it rescinded exemption notification by issuing Notification No.21/2017-CE dated 18th July, 2017 in order to ensure seamless flow of ITC credit to buyers and substituted the 100% tax exemption/refunds with budgetary support for 58% of tax. The appellant filed an appeal before the Supreme Court and contended that the Central Government was bound to give 100% tax exemption. ? ? ?
The Honorable Supreme Court noted that when an exemption granted earlier is withdrawn by a subsequent notification based on a change in policy, even in such cases, the doctrine of promissory estoppel could not be invoked. ? ? ?
However, it can’t be said that the appellant’s claim based on promissory estoppel is without substance. In the deliberations of the GST Council, it was observed that the States also need to correspondingly reimburse the industrial units which were entitled to exemption under any existing incentive scheme out of the share of revenue received through devolution, which, as per the Finance Commission, stands at 42%. ? ? ?
Therefore, the Court permitted the appellant to make representations to the respective State Governments as well as to the GST Council and requested the State Governments and the GST Council to consider such representations. ? ? ?
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The applicant was a major e-commerce platform and engaged in the business of selling fashion and lifestyle products through the portal. It filed an application for the advance ruling to determine whether it would be allowed to claim ITC on vouchers and subscription packages procured from third-party vendors for distributing to eligible customers against loyalty points. ? ? ? ? ?
The Authority for Advance Ruling observed that loyalty points do not have any monetary value and they are non-transferable and can’t be converted to cash. The redemption of loyalty points would involve no flow of consideration from customers and those vouchers & subscription packages shall be issued free of cost to customers and would amount to disposal by way of gift. Therefore, ITC would not be allowed as per Section 17(5) of the GST Act, 2017.
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