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Value of supply

In value of supply chapter illustration 1 given (the customer wants the consignment tasted for gluten or specified chemical residues)I think it is a SUPPLIER OBLIGATION under section 15(2)b but in answer given as INCIDENTAL CHARGES how?


Kanaga Mani

Kanaga Mani

CA Inter

2K+

29-May-20 19:32

23

Answers (10)

If supplier conducts test as part of supply being made, then it comes under his obligation.Here test was conducted on request of customer so comes under incidental expenses.


KEERTHI PRIYA

KEERTHI PRIYA

Moderator

29-May-20 21:37

Sec 15(2)(b)-when supplier obligation is met by recipient also meaning that not charged by supplier from the recipient by including in the price. In the question there mentioned that testing fee is collected from from the customer.so it can't be included in that particular section. And at the same time it can be confirmed that it is an expense which is incidental to the supply or if not it will be a composite supply as per sec 8(a), whether or not as per the instruction of the customer.


Pranav Connecting...

Pranav Connecting...

CA Inter

4K+

30-May-20 01:15

No, if recipient met supplier obligation then it will included in value of supply. Installation and testing charges at recepient's site on his request will be taken as incidental expenses being amount charged for something done in relation to supply.


KEERTHI PRIYA

KEERTHI PRIYA

Moderator

30-May-20 09:38

I am not saying it's not an incidental expense,I meaning the law doesn't want to know the testing is conducted as per the request of the customer or not. I would also like to know that how we can say that it's not a composite supply as it seemed to be a composite supply.


Pranav Connecting...

Pranav Connecting...

CA Inter

4K+

30-May-20 10:19

Just for clarification- 1. As per question the vendor made testing services on request of customer, so those services can be covered under incidental charges covered under Section 15(2) of CGST act. This is for the purpose of determining the value of supply. 2. The vendor supplied processed food also provides testing services which is a naturally bundled transaction, hence we can call it as Composite supply for the purpose of determining rate of GST, as to the principal supply is supply of processed food. To conclude: 1. Sec 15(2) - for determining the value. 2. Composite Supply - to determine the rate of GST.


KEERTHI PRIYA

KEERTHI PRIYA

Moderator

30-May-20 12:04

Please refer last illustration in the video [RTP may 2019]-there freight incurred for the supply is treated as composite supply even it is not requested by customer. Pl clarify There sir clearly said that charge to be an incidental to supply it must be in relation with that supply.i.e, no difference in customer requested for it or not..


Pranav Connecting...

Pranav Connecting...

CA Inter

4K+

30-May-20 13:35

I meaning, 1) vendor made testing as incidental or important part of that supply then it will be sec 15(2)(c) If vendor do testing as an another or extra service then it will be a composite supply.


Pranav Connecting...

Pranav Connecting...

CA Inter

4K+

30-May-20 13:39

Yes for composite the main criteria is nature i.e if supply is naturally bundled then no need for request of customer.


KEERTHI PRIYA

KEERTHI PRIYA

Moderator

30-May-20 13:41

Ok..thank you very much..


Pranav Connecting...

Pranav Connecting...

CA Inter

4K+

30-May-20 13:42

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