Home GST Supply Value of Services Encompasses Both Non-cash and Cash Consideration

Supply Value of Services Encompasses Both Non-cash and Cash Consideration

Supply Value of Services Encompasses Both Non-cash and Cash Consideration
West Bengal GST AAR's Order for Aryan Flour Mills Private Limited

The West Bengal Authority for Advance Ruling (AAR) has said that when offering companies to the State Authorities, the worth of provide should embody each financial and non-monetary issues. Aryan Flour Mills Personal Restricted, a flour mill positioned in West Bengal, provides companies to the State Authorities by processing wheat into fortified flour for distribution by the Public Distribution System (PDS).

The applicant, represented by Mr Manish Raj, asks for clarification regarding the worth of their provide to the State Authorities, the relevant Items and Providers Tax (GST) fee, and the elements to be included in calculating the share of products’ worth within the complete worth of a composite provide, as per Notification No. 2/2018- Central Tax (Charge).

The AAR acknowledged that the applicant’s companies constituted a composite provide of products and companies, with wheat milling being the principal service. This settlement with the State Authorities concerned milling, fortification, and packaging of the flour.

The applicant argued that solely the money worth of products must be thought-about within the provide.

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The composite provide is made for the operation entrusted to a Panchayat below Article 243G of the Structure of India and particular exemptions relevant to provides linked to such processes, decided by the authority.

Nevertheless, the AAR disagreed, stating that the worth of provide ought to embody each money and non-cash parts, comparable to gunny baggage, bran, and refraction. These non-monetary elements had identified values on the time of the availability and have been thus a part of the general worth.

The WB AAR referred to a memo from the Division of Meals & Provides, Authorities of West Bengal, clarifying that the whole provide worth included the estimated worth of gunny baggage and by-products (bran and refraction) maintained by the miller, whatever the precise disposal worth of those items sooner or later.

The AAR, consisting of Tanisha Dutta (CGST Member) and Joyjit Banik (SGST Member), concluded that the worth of products within the composite provide didn’t surpass 25% of the whole provide worth. Subsequently, the companies offered by the applicant to the State Authorities, together with wheat milling, fortification, and distribution below the PDS, have been eligible for exemption below entry serial no. 3A of Notification No. 12/2017-Central Tax (Charge) dated 28.06.2017.

This ruling underscores the significance of contemplating the general provide worth, together with non-monetary elements when figuring out the tax implications of a transaction.


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