In Re: M\/s Nash Industries (I) Pvt Ltd.,
GST
2018 (11) TMI 607 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (19) G. S. T. L. 162 (A. A. R. – GST), [2019] 69 G S.T.R. 369 (AAR)
AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – AAR
Dated:- 25-10-2018
AAR No. KAR ADRG 24\/2018
GST
SRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. MEMBER
\nRepresented by: Sri S.Ramaswamy, Chief Commercial Officer
\nORDER UNDER SUB-SECTION (4) OF SECTION 98 OF CENTRAL GOODS AND SERVICE TAX ACT, 2017 AND UNDER SUB-SECTION (4) OF SECTION 98 OF KARNATAKA GOODS AND SERVICES TAX ACT, 2017
\n1. M\/s Nash Industries (I) Pvt Ltd, (called as the 'Applicant' hereinafter),
\n236-237\/2, 8th Main Road, Peenya Industrial Area, 3rd Phase, Bengaluru – 560058, having GSTIN number 29AADCN9558Q1ZC, has filed an application for Advance Ruling under Section 97 of CGST Act,2017, KGST Act, 2017 & IGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs. 5,000-0<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n was replied as includible. This reply from the jurisdictional Assistant Commissioner of Central Tax asked to refer to the provisions of section 15 read with rule 27 of the CGST law. However, he stated that the customers are of the view that the amortization cost is not includible to arrive at the value for the purpose of GST unlike the erstwhile Central Excise Law. In the absence of clarity on the matter, the applicant preferred the ruling. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ve at the transaction value on which the Central Excise is paid. He has quoted section 15 of the CGST \/ SGST Act and rule 27 of the CGST \/ SGST Rules which reads as under: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n y = consideration in money + Amount equivalent to consideration not in money. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n raised invoices towards their manufacture \/ supply and received the due consideration from the recipient. Therefore entry number 1 of Schedule I is the closest entry to the issue at hand. As the tools are supplied by the recipient to the applicant for the limited purpose of manufacture \/ supply of components, the activity does not amount to permanent transfer of the business asset of the recipient. Therefore, the activity of free supply of tools by the recipient to the applicant does not amount to supply as defined in Section 7 of the CGST Act 2017. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e else or the recipient could supply them free of cost. In case the applicant procures the tools from a third party, then they would incur a cost and the cost could be included in the value of taxable supply to the recipient. There is no scope of any dispute in this situation about the fact that the cost of the tools is an essential element to be included in the cost of the component finally supplied by the applicant. This is also because without the tools the final component could not have been manufactured. However, when the first or third situation prevails, then the applicant has not spent any amount in respect of the tools. Nevertheless the applicant could not have manufactured the components without the tool. Here the cost the tool is borne by the recipient of the supply whereas the same should have been borne by the applicant, as evident from the situation discussed above, (where the applicant procures the tool from a third party). = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s Nash Industries (I) Pvt Ltd.,GST2018 (11) TMI 607 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (19) G. S. T. L. 162 (A. A. R. – GST), [2019] 69 G S.T.R. 369 (AAR)AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – AARDated:- 25-10-2018AAR No. KAR ADRG 24\/2018 GSTSRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. … Continue reading “In Re: M\/s Nash Industries (I) Pvt Ltd.,”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-14965","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14965"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14965\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nc. He stated that the it appears that the valuation provisions under the CGST Law is the same as that provided in the erstwhile Central Excise Law. Therefore, the applicant is of the view that the cost of amortization is to be added to the value of the goods supplied for the purpose of payment of GST. In this regard, he referred to the decision of the Hon'ble High Court in the case of TATA Johnson Controls Automotive Ltd v\/s State of Maharashtra 2017 (7) GST GSTL 271 (BOM) = 2017 (8) TMI 344 – BOMBAY HIGH COURT. He has also enclosed the working for<\/p>\n
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\nSection 15
\n(2) The value of supply shall include:-
\n (a) . . . . . . .
\n (b) 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 service or both.
\n (c) . . . . . . .
\n (d) . . . . . . .
\n (e) . . . . . . .
\n(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.
\nRule 27: Value of supply of goods or services where the consideration is not wholly in money:
\n (a) be the open market value of such supply
\n (b) If the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is e<\/p>\n
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\nHe added that his customers paid the invoice value including excise duty on the amortised cost of the value of the tools under the erstwhile Central Excise Law. However, the same customers are not paying the GST amount charged on the supply of goods stating that the amortised cost of the tool is not includible under the GST.
\ng. The applicant has also referred to the following decisions:
\n1. TATA Johnson Controls Automotive Ltd v\/s State of Maharashtra 2017 (7) GST GSTL 271 (BOM) = 2017 (8) TMI 344 – BOMBAY HIGH COURT
\n2. GSTAMP Automotive India Pvt Ltd v\/s Commissioner of Central Excise reported in 2017 GSTL 337 (Tri) = 2017 (7) TMI 889 – CESTAT MUMBAI
\n3. Lear Automotive India Pvt Ltd v\/s Commissioner reported in 2014 ELT 65 (Tri) = 2013 (12) TMI 1453 – CESTAT AHMEDABAD
\n4. FINDINGS & DISCUSSION:
\n4.1 The transaction of the applicant is verified and found that there are two supplies involved in the entire <\/p>\n
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\n4.3 Now we proceed to examine the provisions of Section 15 of the CGST \/ KGST Act 2017 in order to address the question raised by the applicant.
\nSection 15(1) of the said Acts provides as follows:
\n“The value of a supply of goods or services or both shall be transaction value, which is the price actually paid or payable for the said supply of goods or services or both when the supplier and the recipient of the supply are not related and <\/p>\n
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\nTherefore we are of the considered opinion tha<\/p>\n
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