Value of taxable supply for levy GST [ Section 15(1) ] - GST Ready Reckoner - GST

Value of Taxable Supply Value of Supply Value of Supply Every fiscal statue makes provision for determination of value as tax is normally payable on ad-valorem basis. In GST also, tax is payable on ad-valorem basis i.e. percentage of value of the supply of goods or services. Section 15 of the CGST Act and Rule 27 to Rule 35 of CGST Rules, 2017 ( Chapter IV - Determination of Value of Supply), contain provisions related to valuation of supply of goods or services made in different circumstances and to different persons. Section 15 of CGST Act 2017 define the Value of Taxable Supply.- The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both - where the supplier and the recipient of the supply are not related , and the price is the sole consideration for the supply. [ Section 15(1) of CGST Act ] Explanation of Section 15 of CGST Act provides meaning of Related person Meaning of Transaction Value - Transaction value define in the, Section 4(1)(a) of the Central Excise Act where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall be transaction value . Provided that where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value. Transaction value shall included value of scrap/by-products retained by the job worker cost of waste/scrap shall be included in the value of goods manufactured by the job worker. Whenever the conversion charges get reduced by the cost of wastage /scrap, it should be included in the value of goods manufactured. [ General Engineering works VS CCE (2005 (3) TMI 17 - SC ]. While determining the value of job-work, by-product retained would also be regarded as consideration for supply of milling services and GST would be levied. It is immaterial whether some of the by-product is exempt form GST. [ SRI KANAKADURGA RICE AND FLOUR MILL[2020 (11) TMI 72 - APPELLATE AUTHORITY , A. P. ] Example : Mr. X located in Manipal purchases 10,000 ink pens worth Rs. 4,00,000 from LMP Wholesalers located in Bhopal. Mr. X s wife is an employee in LMP Wholesalers. The price of each ink pen in the open market is Rs. 52. The supplier additionally charges Rs. 5,000 for delivering the goods to the recipient s place of business. Ans. Mr. X and LMP Wholesalers would not be treated as related persons merely because the spouse of the recipient is an employee of the supplier . Therefore, the transaction value will be accepted as the value of the supply. The transaction value includes incidental expenses incurred by the supplier in respect of the supply up to the time of delivery of goods to the recipient. This means, the transaction value will be: Rs. 4,05,000 (i.e., 4,000,000 + 5,000). [Section 15(1) read with section 15(2)]