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TMI Blog2023 (8) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Applicant purchase the material and arrange installation work and they advise applicant to do only supervision work. Here taxable value of supply for applicant is only supervision work and GST liable to be charged and payable on the transaction value i.e. supervision charge (as charged by applicant on total cost of work/material excluding GST on total taxable value of work/material) collected from customers by the applicant - Further, value of material and cost of execution work for installation of lines will be included in the value of supply for determination of taxable value under GST liable to be charged by the Customers of the Applicant. The GST liable to be charged and payable for the work with material arranged by customers of Applicant and should be collected by the firm/authority/person on the basis of invoice raised for the work/Service done - GST liable to be charged and payable for installation work done by the contractors hired by Customers on the basis of invoice raised for the work/service. All the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supervision where electricity lines needs to be installed to supply the electricity at the designated location advised by customers. Installation of lines is done at cost of customers. Thus entire cost is born by the customers. But for safe and proper installation of line it is done in our supervision. 3.2 There are two methods of installing the line. One where entire works with material are arranged by customers and installation work is done by the contractors hired by them. Our role is limited to supervise the work. 3.3 Second, where entire material and installation work is arranged by us on behalf of customers and work is done in our supervision. We charge from the customers as reimbursement towards cost of material and installation cost. Towards our fee for our supply of service we charge only supervision charges. 3.4 Only supervision charges are our fees and all other amount are reimbursement of expenses by us on behalf of our customers. Here it is important to mention that cost of material and installation work is sole responsibility of customers and we do not charge any amount on this behalf. 3.5 Only we claim reimbursement of amount incurred in this behalf. To i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration for the supply. As stated in Section 15 (1) value of supply will be transaction value for supply of goods or services. In our cases supply of service is only supervision work. Installation of line is responsibility of the customers and one part of that work is supervision of work. Thus here in all cases supply of services is supervision work and transaction value is amount received by us on account of supervision charges and accordingly GST on our supply of service i.e supervision work shall be payable. Section 15 (2) reads as under : any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; This section says that any costs where supplier is obligated to pay but recipient makes the payment for that then it value will be added to taxable value. For example- Fee on road contract where transportation charges paid by recipient and value to be paid to the supplier is reduced to that extent. In this case, the transportation charge which was reduced from the price payable will be added back to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour etc on installation of lines: Add : Supervision charges @ 15 % on the cost of material Cost of material, installation expenses etc is paid by us , on behalf of our customer in pure agent capacity and our consideration for work is supervision charges only. Our supply of service is in the form of supervision only. Cost of material and execution cost is born by the our customer. We do not take any profit on it. We claim only reimbursement of expenses which is being incurred by us on behalf of customers .Thus value of supply of service is only price charged by us i.e supervision charges. All other items i.e cost of material used, like cost of transformers, cost of poles wires and labour cost is only reimbursement of amount which was paid by us in pure agent capacity. Rule 33 of CGST Rules 2017: Value of supply of services in case of pure agent Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- (i) the supplier acts as a pure agent of the recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DISCUSSION AND FINDING 8. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'. 9. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling required- (1) Determination of lime and value of supply of goods or services or both. At the outset, we find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits. 10. We have gone through the submissions made by the applicant and have examined the same. We observe that the applicant has sought advance ruling on the following questions- 1. Whether in the given facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST Act, 2017 is reproduced below:- Consideration means any payment made or to be made, whether in money or otherwise in respect of. in response to or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government In view of above facts, we observe that the element of consideration is not involved in the activity and therefore the said activity is not a supply under the Section 7 of GST Act, 2017. 15. Further, the Schedule II of GST Act, 2017 has provision on transfer of business assets made with or without consideration. As the asset is a kind of business asset, we can look in to relevant entry' for examination:- 4. Transfer of business assets (a) where good forming [Hirt of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration. such transfer or disposal is a supply of goods by the person: While going through the above provision of Schedule II, we find that it p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment to the third party on authorization by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation .- For the purposes of this rule, the expression pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply, (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. Thus GST is payable on only value of supervision charges which is being billed by them f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is tenable. In case materials have to be provided by the applicant including supervision charge the GST shall be charged under single invoice raised by the applicant. (ii) Discussion on methods of installing as discussed in point (B) Of Para 17 As discussed above, customers of the Applicant purchase the material and arrange installation work and they advise applicant to do only supervision work. Here taxable value of supply for applicant is only supervision work and GST liable to be charged and payable on the transaction value i.e. supervision charge (as charged by applicant on total cost of work/material excluding GST on total taxable value of work/material) collected from customers by the applicant. Further, value of material and cost of execution work for installation of lines will be included in the value of supply for determination of taxable value under GST liable to be charged by the Customers of the Applicant. The GST liable to be charged and payable for the work with material arranged by customers of Applicant and should be collected by the firm/authority/person on the basis of invoice raised for the work/Service done. The GST liable to be charged and p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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