Authority for Advance Ruling — Sales Promotion Strategy– Supply of Extra Cigarettes-- The Applicant is engaged in the business of manufacturing, marketing and distribution of cigarettes in the domestic market i.e. in India and even abroad. The applicant has introduced a new sales promotion strategy by way of which the Applicant would be supplying extra packs of cigarettes along with their regular supply quantity to their distributors without receiving any additional consideration and/or additional payment for the extra supply. The applicant sought an advance ruling as to whether the extra packs of cigarettes would again be leviable to GST; if yes, the taxable value which can be attributed to such extra packs of cigarettes for levy of GST; whether extra packs of cigarettes would be considered as exempt supplies or free samples and hence, attracts the provisions of Section 17(2) of the Act, 2017 or clause (h) of Section 17(5) of the UPGST Act, 2017. The authority observed that the provisions relating to 'supply' with respect to related persons and / or distinct persons are specifically covered within Schedule I of the Act and any supply of goods or services or both when made in the course or furtherance of business between the related persons or between the distinct persons, the same would be treated as supply even when the supply is made without consideration.

Held that:- The Hon’ble Authority for Advance Ruling ruled in negative. Further held that the extra packs of cigarettes will not be considered as exempt supplies or free samples and hence the provisions of 17(2) or clause (h) of Section 17 (5) of the Act, 2017 will not be applicable.