Page 15 - Chapter 6_Value of Supply

₹10,000/unit). What will be the value of supply in the given case?
(Assume that agent is issuing his own invoice)
Answer:- Legal Provision:
Ü As per Rule 29 of the Valuation rules 2017, if supply is made by principle to agent, then value shall be
determined either:
a) Open Market Value or 90% of price charged for the supply of goods of like kind and quality by the recipient
to his unrelated customers who is making further supply of same goods, at the option of the supplier.
b) If value cannot be determined as per (a) above, then apply rule 30, 31 in that order.
Discussion & Conclusion:
Ü Value of the supply by Prestige Appliances Ltd. to its agent would be either
Ø ₹ 2,80,000 (Open market value) OR
Ø ₹ 2,70,000 ( i.e 90% x 10,000 x 30)
Ü Therefore, it is beneficial to opt ₹ 2,70,000.

06: Rule 30: Value of supply of goods or services or both based on cost.

Gama Ltd., a manufacturer, has two production units - Unit A (Maharashtra) and Unit B (Goa). Unit
Q.15
A of Gama Ltd. Manufactures product 'X'.
In March, Unit A has manufactured 1000 units of product 'X', 80% of such production is sent to Unit B for
further manufacture of product 'Y' and the remaining 20% is lying in stock.
Compute value of supply, assuming that value cannot be determined under rule 28 and therefore, value is to
be determined under rule 30.
Details of cost is given as follows :-
Particulars Amount (₹)
Cost of direct materials [inclusive of GST @ 12%] 22,400

Cost of direct salaries [includes house rent allowance of ` 12,000] 30,000
Consumable stores and repairs 5,400
Depreciation of machinery 500
Quality control cost 4,300

Research & Development Cost 2,700
Administrative cost : (a) Production related 2000
(b) Project management related 1,800
Interest and financial charges 2,400

Cost incurred due to break down of machinery 1,300
Amortised cost of moulds and tools received free of cost from the production unit “B” for 600
being used only in the manufacture of goods to be consumed by unit 'B'
Selling and distribution cost 4,600
Scrap value realized 1,500

Answer :
Ü As per Para 2 of Schedule I, Inter-state movement of goods from one branch to another amounts without
consideration will amount to 'supply' & treated as deemed distinct persons.
Ü As per Rule 30 of CGST Rule 2017, in case of manufacturer, the Value of supply shall be 110% of cost of
production or manufacture.
Ü Determination of Cost & Value of supply under Rule 30 (based on Cost Accounting Standard - 4):

S.No. Particulars Amount (₹)
1. Material consumed [Cost (net of input credit of GST) = ₹ 22,400 x 100 ÷ 112] 20,000

2. Cost of direct salaries [including house rent allowance of ₹ 12,000] 30,000

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