SECTION 17. VALUE OF TAXABLE SUPPLY:-

GST Update 25.02.2016

GST DAILY DOSE OF UPDATION:-

SECTION 17. VALUE OF TAXABLE SUPPLY:-

(1) The value of a supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply of goods and/or services where the supplier and recipient of the supply are not related and the price is the sole consideration for the supply.

(2) The transaction value under sub-section (1) shall include:

(a) Any amount that the supplier is liable to pay but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods and/or services;

(b) The value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable;

(c) Royalties and license fees related to the supply of goods and/or services being valued that the recipient of supply must pay, either directly or indirectly, as a condition of the said supply, to the extent that such royalties and fees are not included in the price actually paid or payable;

(d) Any taxes, duties, fees and charges levied under any Statue other than the SGST Act or the CGST Act or the IGST Act;

(e) Incidental expenses such as commission, packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, provision of services;

(f) Subsidies provided in any form or manner, linked to the supply;

(g) Any discount or incentive that may be allowed after the supply has been effected.

It is pertinent to note that the concept of transaction value as prevalent in section 4 of the Central Excise Act, 1944 is proposed to be incorporated in the GST regime with certain modifications. As per the transaction value in Central Excise Act, the value of goods is the price actually paid for the goods sold along with money value of additional consideration flowing from buyer to seller but excluding taxes actually paid. In the proposed GST regime, all taxes leviable on goods like CST, VAT, excise duty etc. will be subsumed into single tax. However, inspite of this, the provision as regards value of taxable supply includes taxes, duties, cess etc. levied under other Statues. It is not understandable which taxes are to be included in the value of taxable supply as all taxes will be merged into GST. Moreover, the fundamental principle on which GST regime is designed is to avoid cascading effect and if any other taxes are included in the value of taxable supply, it would tantamount to levy of tax on tax which is totally unjustifiable.

Furthermore, subsidies provided in any form or manner which is linked to supply will also be included in the taxable value. It is worth observing that this issue is the point of litigation even in the present scenario wherein a class of assessees is permitted to retain certain amount of VAT collected by them from the buyers in lieu of subsidies provided by the State Government. This is being objected by the revenue department and it is being contended that the VAT retained should be includible in the assessable value for the purpose of paying excise duty because as per section 4 of the Central Excise Act, the taxes actually paid are excluded but taxes retained by assessees are to be included in the assessable value. However, it appears absurd that the subsidy granted by way of adjustment in VAT collected should form part of the assessable value because it is not consideration flowing from buyer to seller. But, since there are two Apex Court decisions reported as COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VS SUPER SYNOTEX INDIA LIMITED [2014 (301) ELT 273 SC] and COMMISSIONER OF CENTRAL EXCISE, DELHI III VS MARUTI SUZUKI INDIA LIMITED [2014 (307) E.L.T. 625 (S.C.)], the issue is under dispute in the present scenario. It appears that the subsidy granted to assessees are specifically included in the value of taxable supply in the proposed GST regime.

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GST Update 25.02.2016

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