GST APPLICABLE ON LABOUR CESS AND SEIGNORAGE FEES

[Mukesh Gupta]

Dear Sir,

I have got work contract from Bihar Government for various work. In Some work contract Contract Value show as follow

Cost of Work = Rs.100

GST @12% =Rs. 12

LABOUR CESS 1% =Rs. 1

SEIGNIORAGE FESS = Rs. 5

TOTAL WORK CONTRACT =Rs.118.

MY QUESTION IS I AM LIABLE FOR GST ON LABOUR AND SEIGNIORAGE FEE OR NOT.

BECAUSE IN AGREEMENT LABOUR CESS AND SEIGNIORAGE FEES GIVEN BY BIHAR GOVERNMENT SEPARATELY AND THAT AMOUNT DEDUCTED BY DEPARTMENT .

But GST Officer demanding gst on Labour cess and Seigniorage fees.

I ALSO RAISED THE GST INVOICE TO BIHAR GOVERNMENT AS FOLLOWS

COST OF WORK DONE =Rs.100

GST@12% = Rs.12

LABOUR CESS = Rs.1

SEIGNIORAGE FESS = Rs.5

TOTAL VALUE OF INVOICE =Rs.118

AI Summary

Value of supply includes non GST cesses, so labour cess and similar fees may be taxable under GST if includible in consideration.
Contractor invoices for work list labour cess and seigniorage fees separately, which the government department deducts and remits. Under Section 15(2) of the CGST Act, the value of supply includes taxes, duties, cesses and fees charged separately or amounts the supplier is liable to pay but which the recipient incurs; contributors therefore treat such cesses as includible in the taxable value and subject to GST unless a statutory exclusion or valid pure agent treatment applies.