In paragraph 7.6 of the ruling, the Authority itself observed that: "gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, ....". The important takeaway of this definition is that gift is voluntary in nature. However, in the instant case, these goods / services are awarded only on achievement of targets (viz., quantity and value of purchases). Therefore, to classify such goods / services as gift appears incorrect.
Section 17(5)(g) ibid restricts ITC on goods / services used for personal consumption. The term "used" in this clause is noteworthy. That is, ITC can be denied only if the goods / services procured are used by the ITC claimant (viz., the assessee in question) for his/its personal consumption. In no manner, the assessee utilises the procured goods / services for its personal consumption (having procured them in the course or furtherance of business). Rather, the goods / services may be used by the awardees for their personal consumption, for which there is no restriction on ITC availment by the assessee. Hence, the denial of ITC citing the reason as being for personal consumption too appears incorrect.
On the other hand, vide clause 1 of Schedule I ibid, permanent transfer or disposal of business assets (on which ITC was claimed) is treated as "supply" even if it is without consideration. However, there is no reference thereto in the ruling. The phrase "business asset" is not defined under GST law. While it would cover goods, what about services? Was it left intentionally or is it a draftsmen error?