2018 (6) TMI 72 – AUTHORITY FOR ADVANCE RULING – WEST BENGAL – 2018 (13) G. S. T. L. 343 (A. A. R. – GST), [2018] 2 GSTL (AAR) 60 (AAR) – Valuation of a supply – Goods transferred to branches in another state – recipient eligible for full input tax credit – Optical Lenses and Frames for Spectacles and Accessories – transfer from the Head Office in West Bengal to its branches in other states – Section 97(2)(c) of the CGST/ WBGST Act, 2017 – whether such goods supplied to the branches in states other than West Bengal can be valued in terms of the Cost Price under the Second Proviso to Rule 28 of CGST Rules, 2017, instead of 90% of MRP as required under the First Proviso of the same Rule?
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Held that:- The First Proviso to Rule 28, thus, is clear that where goods are supplied to a recipient for further supply as such, the valuation of these goods when transferred from the supplier to the recipient may, at the option of the supplier, be determined at 90% of the price that will be char
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The expression “where the recipient is eligible for full input tax credit”, as used in the Second Proviso to Rule 28 of CGST Rules, 2017, means that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mentioned in the respective invoice or any other document valid under Section 16(2)(a) of GST Act. – Case Number / ARN 10 of 2018 – Order No. & 07/WBAAR/2018-19 – Dated:- 30-5-2018 – Vishwanath Member And Parthasarathi Dey Member Applicant s representative heard Sri Sandeep Kothari, CFA RULING 1. The Applicant is stated to be a Re-seller and Importer of Sun Glasses, Frames, Lenses, Contact Lenses, etc. having Head Office in West Bengal. Goods, namely, Optical Lenses and Frames for Spectacles and Accessories, are transferred from the Head Office in West Bengal to its branches in other states. Advance Ruling has been sought on whether such goods supplied to the branches in states other than West Bengal can be valued in terms of the
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eligible for full input tax credit , especially in the context of the fact that apart from the trading goods, the Head Office also supplies to these branches non-trading stock like printing &stationery, office equipment, etc. The Applicant states that these non-trading stock are transferred at zero value 3. Rule 28 deals with valuation of a supply when it is made between distinct or related persons. If a person obtains or is required to obtain more than one registration in more than one State and/or Union Territory, then, in accordance to the provisions under Section 25 of the GST Act, each registration shall be treated as distinct persons for the purpose of the GST Act. The Applicant, at the time of Personal Hearing, has informed that separate registrations have been obtained for business establishments in different states. These independently registered business establishments in states other than West Bengal are referred to as branches with Head Office in West Bengal. Supplies
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h reference to specific invoices. Hence all Invoices or documents of like nature under Section 16 of GST Act, of goods for further retail sale or for use in the business (non-trading stock such as stationery and office equipment) transferred to branches considered as distinct persons being located in States other than West Bengal, are valid documents eligible for Input Tax Credit. 5. The First Proviso to Rule 28, thus, is clear that where goods are supplied to a recipient for further supply as such, the valuation of these goods when transferred from the supplier to the recipient may, at the option of the supplier, be determined at 90% of the price that will be charged by the recipient to its customer, not being a related person. The two clauses important to note in this Proviso are: a) goods received by the recipient are to be sold to a customer not being a related person and b) the determination of value at 90% of the price that will be charged by the recipient to this customer is an
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or the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. In other words, the expression where the recipient is eligible for full input tax credit , is to be considered in the light of Section 17(1) of GST Act, to mean that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mention in the respective invoice or any other document valid under Section 16(2)(a) of GST Act. In view of the foregoing we rule as under RULING The Applicant has the option of not supplying goods to its branches under the First Proviso of Rule 28 and is eligible to value these goods by applying the terms of the Second Proviso to Rule 28 of GST Act. The expression where the recipient is eligible for full input tax credit , as used in the Second Proviso to Rule 28 of CGST Rules, 2017, means that the recipient will be eligible to take full i
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