Page 12 - Chapter 6_Value of Supply

Notes:-
1) Value of Supply (Sec 15(1)) – Transaction value = price paid/payable if supply is to an unrelated person and
price is the sole consideration.
2) Incidental Expenses (Sec 15(2)(c)) – Any extra charges by the supplier are included in the value.

3) Supplier’s Pre-Delivery Actions (Sec 15(2)(c)) – Any amount for activities before/during delivery is included.
4) Transportation Cost – Not included as the customer pays directly to a third-party service provider, and the
supplier is not involved.

5) Subsidies (Sec 15(2)(e)) – Price-linked subsidies (except Govt. subsidies) are included in the value.
6) Upfront Cash Discount – Deducted if given at the time of supply.
7) Place of Supply (IGST Act Sec 10(1)(d)) – Since supplier is in UP and machinery is installed in Haryana, it
is an inter-State supply, attracting IGST.
8) Composite Supply (Section 8(a)) – Since the principal supply is machinery, tax is applied at the
machinery’s rate, even though installation and handling services are included.
9) Interest & Recovered Discount (Sec 15(2)(d)) – Interest on delayed payment and recovered cash discount
are included in the value. Tax is computed using back-calculation (Rule 35).

10) Time of Supply (Section 12) –
† Goods – 29 August (invoice date).
† Interest & Recovered Discount – 30 September (date of receipt). A debit note can be issued for these
charges.

Valuation Rules 2017

03: Rule 27: Value of supply of goods or services where the consideration is not wholly in money

Q.10
Dev Enterprises is the supplier of water coolers. Dev Enterprises supplied water coolers to an
unrelated party, Vimal Traders for consideration of ₹ 2,95,000 (inclusive of GST @ 18%). Vimal Traders also
gave some materials to Dev Enterprises [valuing ₹ 10,000 (exclusive of GST)] as an additional consideration
for such supply.
At the same time, Dev Enterprises has supplied the same goods to another unrelated person at price of ₹
2,97,360 (inclusive of GST@18%).
You are required to:
1) Determine the value of goods supplied by Dev Enterprises to Vimal Traders.
2) What would your answer be if price of ₹ 2,97,360 is not available at the time of supply of goods to Vimal
Traders? Explain briefly[Study Mat] [CA Final MTP Mar 23, Oct 24]
Answer:-Legal provision:
Ü As per Rule 27 of the Valuation Rules 2017, if the consideration is not wholly in money, then value of supply
shall be determined on the following principles:
a) Open market value
b) If (a) is not possible then money value of equivalent consideration
c) If (a) or (b) not possible then value of like kind & quality.
Ü Open market value of a supply means the full value in money, excluding the applicable GST, where the
supplier and the recipient of the supply are not related and the price is the sole consideration, to obtain such
supply at the same time when the supply being valued is made.
Ü Further, if open market value of the supply is not known, then the value of the supply will be the consideration
in money plus the money equivalent to the non-monetary consideration, if such amount is known at the time of
supply.

V’Smart Academy 6.10 CA Vishal Bhattad 09850850800