VALUE OF TAXABLE SUPPLY - Goods and Services Tax - GST

VALUE OF TAXABLE SUPPLY 1. As per Section 15(1) of the GST Act, 2017 , the value of 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, including the non-monetary consideration, if any, where the supplier and the recipient of the supply are not related and the price is sole consideration for supply. 2. Further Section 15[2][b] states 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; 3. From the conjoint reading of Section 2[31] read with Section 15[2][b] above, it is clear that the GST Act contemplates to treat the transaction value as the value of supply of goods or services and the value has to be determined as per Section 15 of the GST Act . 4. Coming back to issue, the precise example is like this: ABC , the service recipient, agrees to supply HSD free of cost to the XYZ , the service provider, for use in mining support services as per the written agreements. HSD per say is never the part and parcel of the agreed price per ton or per hour. Further ABC does not debit [or no reimbursement of cost of HSD] any amount towards the free supply of HSD to XYZ for use in the supply of services to ABC. The consideration paid to XYZ is as per tax invoices issued to ABC. The notional cost of HSD is never the integral part and parcel of the price fixed in terms of MOU. 5 . Factual position being so, the inspecting authorities are insisting XYZ to pay GST even on the cost of HSD freely supplied by ABC in terms of Section 15[2][b] of the GST Act . 6. In this regard, there are couple of Advance Rulings which are contrast to each other. Since Advance Ruling is not binding law, other than on the applicant, I have not quoted them here to avoid confusion. QUERY 7. The Government of India has issued a Circular No. 47/21/2018-GST, F.No. CBEC- 20/16/03/2017-GST dated 8-6-2018 , vide Sl. No. 1, it clarifies that the value of free supplies need not be added to the value of supply in terms of Section 15[2][b] of the GST Act . 8. Although this Circular clarifies in respect of moulds jigs supplied free of cost to the job workers, can the intent of this Circular be applied to all such free supply of goods and services including HSD for use mining support services? 9. A fine distinction is required to be made to establish the correct GST treatment on free supply of HSD in question either to include it under Section 15[2][b] or exclude it from the ambit of Section 15 itself. So the experts are requested to throw light on this query with supporting judicial rulings/circular/notification. Happy Sunday. Relax