Page 11 - Chapter 6_Value of Supply

Ü recovers the discount given at the time of receiving payment from the customer (no separate amount of
GST is recovered) and
Ü charges simple interest @ 1% per month or part of the month (no separate amount of GST is recovered)
on the total amount due from the customer (towards the machinery supplied) from the date of making
the supply till the date of payment. However, no interest is charged on the tax dues.
6) For every machinery supplied, Aviant Ltd. receives a price linked subsidy of ₹ 2,00,000 from its holding
company Diligent Ltd.
Aviant Ltd. has supplied a machinery to an unrelated party, Daffodil Pvt. Ltd. on 29th August at a price of ₹
40,00,000 (excluding all taxes). Invoice was issued on 29th August by Aviant Ltd.
The corporate office of Daffodil Ltd., which is at New Delhi, has entered into contract with Aviant Ltd. for
supply of machinery. However, the machinery has been installed at Daffodil Pvt. Ltd's registered
manufacturing unit located in Gurugram (Haryana). Daffodil Pvt. Ltd. has paid the freight directly to the
GTA.
Discount @ 2% on the price of machinery excluding taxes was given to Daffodil Pvt. Ltd. as it agreed to make
the payment within 15 days. However, Daffodil Pvt. Ltd. paid the consideration on 30th September.
Assume the rates of taxes to be as under:
Bottle cap making machine
CGST: 6% SGST: 6% IGST: 12%
Service of transportation of goods

CGST: 2.5% SGST: 2.5% IGST: 5%
Other services involved in the above supply
CGST: 9% SGST: 9% IGST: 18%

Calculate the GST liability [CGST, SGST or IGST, as the case may be] with respect to the supply of
machinery and support your conclusions with legal provisions in the form of explanatory notes.
Make suitable assumptions, wherever needed. [Study Mat]
Answer :- Computation of GST liability of Aviant Ltd:
Particulars Amount (₹)
Price of machine [Note 1] 40,00,000

Add: Handling and loading charges [Note 2] 10,000
Add: Installation and commissioning charges [Note 3] 1,00,000
Add: Transportation cost [Note 4] Nil
Add: Price linked subsidy from Diligent Ltd. [Note 5] 2,00,000
Total price of the machine 43,10,000

Less: 2% cash discount on price of machinery (40,00,000 × 2%) [Note 6] 80,000
Taxable value of supply 42,30,000
Tax liability for the month of August [Note 10]

IGST @ 12% [Note 7 & Note 8] [A] 5,07,600
Tax liability for the month of September [Note 10]
Add: Interest collected @ 2% on ₹ 41,10,000 [Note 9] 82,200
Add: Cash discount recovered [Note 9] 80,000

Value of interest and cash discount inclusive of tax 1,62,200
IGST = (₹ 1,62,200 X 12/112) [B] 17,379
Total IGST payable on the machinery [A] + [B] 5,24,979

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