Transaction Value is the Taxable Value of Supply unless rejected and determined u/s 15 of the GST Act: AAR [Read Order]

The Karnataka Authority of Advance Ruling ( AAR ) has held that transaction value is the taxable value of supply unless rejected and determined under section 15 Goods and Services Tax Act.

The applicant, M/s Pankaj Enterprises is an individual and is not registered under GST, but intends to start the business as a service provider in the construction and sale of commercial immovable properties.

The applicant sought clarification with respect to the determination of the taxable value of the commercial immovable property for the purpose of GST liability i.e. whether the sale consideration mentioned in the sale deed between the builder and the proposed purchaser should be considered as taxable value or Transaction value of the said immovable property or the guidance value fixed by the state government authorities for the purpose of the registration of such property.

Authority observed that section 15 of GST Act 2017 deals with”value of taxable supply” and the same is reproduced below:

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.

(2)The value of supply shall include-

(a)     any taxes, duties, cesses, fees, and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act, and the Goods and Services Tax (Compensation to States) Act if charged separately by the supplier;

(b)     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;

(c)     incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

(d)     Interest or late fee or penalty for delayed payment of any consideration for any supply; and

(e)     Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

The Coram of Dr. Sri. M. P. Ravi Prasad, Member (State Tax) and Sri. T. Kiran Reddy Member (Central Tax) has held that “from section 15 it is clear that the GST Act contemplates treating the transaction value as the value of supply unless the same is rejected and the value determined as per Section 15 of the GST Act. It does not contemplate to consider a guidance value prescribed under another legislation to be deemed to be the value of the supply unless the transaction value itself is disputed and found not acceptable under Section 15 of the GST Act. In the latter case, the determination of the value of such supply shall be made as per the provisions of 15 of the GST Act”.

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