TaxTMI 
TaxTMI 
2023 (8) TMI 926
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....luded in the value of supply for determination of taxable value under GST where all such cost are taken as reimbursement while our supply is only supervision charges. 2. Whether in the given facts and circumstances (In Annexure No 1) value of material and cost of execution work for installation of lines will be included in the value of supply for determination of taxable value under GST where all such costs are born by the recipient of service and we charge only supervision charges. 3. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. The applicant has submitted that- 3.1 We are Electricity Distribution Company. Being expertise in the area, Electricity Lines are installed in our supervision where electricity lines needs to be installed to supply the electricity at the designated location advised by customers. Installation of lines is done at cost of customers. Thus entire cost is born by the customers. But for safe and proper installation of line it is done in our supervision. 3.2 There are two me....
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....e are two methods of installing the line. (1) One where entire work with material is arranged by customers and installation work is done by the contractors hired by them. Our role is limited to supervise the work. In the first method of work, as discussed in first paragraph, customers themselves purchase the material and arrange installation work and they advise us to do only supervision work. Here in our opinion value of supply of our service is supervision work and GST should be payable on the value of transaction value i.e supervision work only. Section 15 of CGST Act 2017 reads as under: 15. Value of Taxable Supply.- (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. As stated in Section 15 (1) value of supply will be transaction value for supply of goods or services. In our cases supply of service is only supervision work. Installation of line is responsibility of the customers and one part of that work....
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.... found less than the estimated material then balance amount is refunded to the party. (2) Second, where entire material and installation work is arranged by us on behalf of customers and work is done in our supervision. We charge from the customers as reimbursement towards cost of material and installation cost. Towards our fee for our supply of service we charge only supervision charges. Only supervision charges are our fees and all other amount are reimbursement of expenses by us on behalf of our customers. Here it is important to mention that cost of material and installation work is sole responsibility of customers and we do not charge any amount on this behalf. Only we claim reimbursement of amount incurred in this behalf. To install the lines is the liability of customers our condition is only that installation work has to be supervised by us. We charge the prices on our work as under: Cost of material, labour etc on installation of lines: Add : Supervision charges @ 15 % on the cost of material Cost of material, installation expenses etc is paid by us , on behalf of our customer in pure agent capacity and our consideration for work is supervision char....
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....nstruction of lines, customer contribution is credited in our books of accounts. 5. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 6. The application for advance ruling was forwarded to Assistant Commissioner, Central Tax & Central Excise, Division-Varanasi vide letter dated 22.03.2023 to offer their comments/views/verification report on the matter. No views/comments has been offered from the concerned officer on the ground that this office is not competent authority to offer any comment under Advance Ruling as communicated vide letter dated 06.04.2023. 7. The applicant was granted a personal hearing on 11.04.2023 which was attended by Shri Ajay Kumar Mishra, the authorized representative of the applicant during which he reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 8. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to....
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....ance of business; We find that, the above referred section emphasize on three dimensions to declare an activity a supply under GST Act:- (i) The activity should be sale/transfer of goods or services or both etc (ii) there should be consideration involved (iii) The activity should be in course or furtherance of business 13. We can now examine the constructed power transmission lines in relation to definition of goods as mentioned in the GST Act, 2017:- (52) "goods" means every kind of movable property other them money and securities but includes actionable claim, growing crops, grass and things attached to or farming part of the land which are agreed to be severed before supply or under a contract of supply: In view of above definition we find that the assets created by the applicant being an immovable property docs not fall under the definition of goods as mentioned in the GST Act 2017. 14. The definition of consideration .in Section 2 (31) of the GST Act, 2017 is reproduced below:- "Consideration" means any payment made or to be made, whether in money or otherwise in respect of. in response to or for the inducement of the su....
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....on for work is supervision charges only. Their supply of service is in the form of supervision only. Cost of material and execution cost is born by the their customer. They do not take any profit on it. They claim only reimbursement of expenses which is being incurred by them on behalf of customers .Thus value of supply of service is only price charged by us i.e supervision charges. All other items i.e cost of material used , like cost of transformers, cost of poles wires and labour cost is only reimbursement of amount which was paid by the Applicant in pure agent capacity. Rule 33 of CGST Rules 2017: Value of supply of services in case of pure agent Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separat....
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.... i.e supervision work shall be payable. Section 15 (2) reads as under: any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; This section says that any costs where supplier is obligated to pay but recipient makes the payment for that then it value will be added to taxable value. But in this case obligation to pay the cost of installation of lines and cost of material used therein is of recipient of service i.e customers of Applicant and that too is being paid by the recipient of service i.e customers, hence here value of supply of service will be transaction value i.e supervision charges paid to the Applicant. 17. (i) Discussion on methods of installing as discussed in point (A) of Para 17 As discussed above, all the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenable. In case materials have to be provided by the applicant including supervision charge the GST shall be charged under s....