Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 17-1-2019 – Introduction Revenue laws are often called as incomplete without valuation. Tax is always charged on some basic value and guiding principles to calculate such value is enumerated in the concerned law itself. In fact come times courts had held inapplicability of taxation in case where valuation is failed. In this article the author aims to discuss includibility of expenses incurred during the course of provision of services in the value of services under GST law in the light of a recent AAR ruling held by West Bengal in the case of Premier Vigilance and Security Pvt Ltd 2018 (11) TMI 337 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL Legal Provisions The valuation principles are enumerated in Section 15 of the CGST Act 2017. The governing provision of Section 15 is further preceded by the rules stated at Rule 28 to Rule 35 in CGST Rules 2017. According to the principle provision stated in Section 15 supra, the c
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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. Illustration. Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of access to a road or bridge. The company being the owner of the vehicles was the recipient of the services provisioned on payment of toll, which was compulsorily levied on the vehicles. The expenses so incurred were, therefore, cost of the services provided to the banks reimbursement of such cost was no disbursement, but merely the recovery of a portion of the value of supply made to banks. Conclusion In view of the legal provisions cited and the facts mentioned above it was held that the company was not acting in the capacity of a pure agent of the bank while paying toll charges were cost incurred, so that his vehicles can access roads/bridges to provided security services to the recipients. Toll charges paid are not, therefore to be excluded from the value of supply Rule 33. GST shall, therefore be payable at the applicable rate on the entire value of the supply including toll charges paid. Comments The above ruling is an important one for valuation of supply as it is going to have
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =