TaxTMI 
TaxTMI 
2018 (11) TMI 607
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.... 3rd Phase, Bengaluru - 560058, having GSTIN number 29AADCN9558Q1ZC, has filed an application for Advance Ruling under Section 97 of CGST Act,2017, KGST Act, 2017 & IGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs. 5,000-00 each under the CGST Act and the KGST Act. 2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question: a) Whether the amortised cost of the tool to be added to arrive at the value of the goods supplied for the purpose of GST under Section 15 of the CGST Act read with rule 27 of CGST Rules. 3. The applicant furnishes some facts....
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....BAY HIGH COURT. He has also enclosed the working for the computation of GST. d. After the hearing, the applicant submitted that the they are manufacturers of sheet metal pressed components and supply to industrial customers like Automotive, Banking Hardware, Power Protection, Alternate Energy, etc. The components were manufactured based on the drawing of the customer. To manufacture these components, the tools were designed and manufactured by the applicant. Such manufactured tools were billed to the customer, even though the tools are retained by the applicant for the manufacture of components. The payment was received by the applicant for the tool. e. He has stated that there are umpteen judgements of the Tribunal and Hon'ble Courts....
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.... / SGST Act, it says that any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient is includible. He states that had the supplier procured it from outside, the cost of the tool would have formed part of the value of supply of the component. As per clause (b) of sub-section 2 of section 15, if the tool is provided free of cost to the supplier, the amortised cost of the tool would have formed part of the taxable supply. (f) The applicant submitted that the components supplied to the recipient are tailor made (or made as per the specifications of the customer) and hence are not available in the open market and so there is no open market value of such supply.. In such case, recours....
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....st to the applicant and the applicant uses the same for the manufacture of the components. Section 7(1) of CGST Act 2017 stipulates that 'Supply' shall be made for a consideration. Therefore, consideration is an essential element in supply. However Section 7(1)(c) specifies that the activities described in Schedule I shall be considered as 'Supply' even if there is no consideration involved. Schedule I lists out four such activities which shall amount to 'Supply' even if such an activity is carried out without any consideration. In the instant case the tools are business assets in the hands of the recipient as the applicant has raised invoices towards their manufacture / supply and received the due consideration from the recipient. Therefor....
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.... included in the price actually paid or payable for the goods or services or both" In the instant case the applicant and the recipient enter into an agreement where the applicant is required to 'supply' certain components. These components require specialized tools for their manufacture. The tools could be either manufactured by the applicant himself or they could get it manufactured by someone else or the recipient could supply them free of cost. In case the applicant procures the tools from a third party, then they would incur a cost and the cost could be included in the value of taxable supply to the recipient. There is no scope of any dispute in this situation about the fact that the cost of the tools is an essential element to be in....