Radiant Ltd., registered in Noida (Uttar Pradesh), is a supplier of machinery used for making bottle caps. The supply of machinery is effected as…

CA Final · Indirect Tax Laws · MTP · September 2025
Radiant Ltd., registered in Noida (Uttar Pradesh), is a supplier of machinery used for making bottle caps. The supply of machinery is effected as under: The wholesale price of the machinery (excluding all taxes and other expenses) at which it is supplied in the ordinary course of the business to various customers is 42,00,000.However, the actual price at which the machinery is supplied to an individual customer varies within a range of ± 10% depending upon the terms of contract of supply with the particular customer.Apart from the price of the machinery, Radiant Ltd. charges from the customer the following incidental expenses:associated handling and loading charges of 10,000installation and commissioning charges of 1,00,000Transportation of machinery to the customer's premises is arranged by Radiant Ltd. through a third-party service provider [Goods Transport Agency (GTA)].The customer enters into a separate service contract with the GTA and pays the freight directly to it.A cash discount of 2% on the price of the machinery is offered at the time of supply, if the customer agrees to make the payment within 15 days of the receipt of the machinery at his premises.In the event of failure to make the payment within the stipulated time, the company-recovers the discount given at the time of receiving payment from the customer (no separate amount of GST is recovered); andcharges simple interest @ 1% per month or part of the month (no separate amount of GST is recovered) on the total amount due from the customer (towards the machinery supplied) from the date of making the supply till the date of payment. However, no interest is charged on the tax dues.For every machinery supplied, Radiant Ltd. receives a price linked subsidy of 2,00,000 from its holding company Decent Ltd. Calculate the Assessable Value of supply of machine. Make suitable assumptions, wherever needed.

Suggested Answer and Working Notes:

Computation of GST liability of Radiant Ltd. Particulars (₹) Price of machine [Note 1] 40,00,000 Add: Handling and loading charges [Note 2] 10,000 Installation and commissioning charges [Note 3] 1,00,000 Transportation cost [Note 4] Nil Price linked subsidy from Decent Ltd. [Note 5] 2,00,000 Total price of the machine 43,10,000 Less: 2% cash discount on price of machinery = 40,00,000 × 2% [Note 6] (80,000) Assessable value of supply 42,30,000 Notes: (1) As per section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value i.e., the price actually paid or payable for the said supply when the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) All incidental expenses charged by the supplier to the recipient of a supply are includible in the value of supply in terms of section 15(2)(c) of the CGST Act, 2017. (3) Any amount charged for anything done by the supplier in respect of the supply of goods at the time of, or before delivery of goods is includible in the value of supply in terms of section 15(2)(c) of the CGST Act, 2017. (4) Transportation cost has not been included in the value of supply of the machinery as it is a separate service contract between the customer and the third-party service provider. The customer pays the freight directly to the service provider. The supplier (Radiant Ltd), in this case, merely arranges for the transport and does not provide the transport service on its own account. Therefore, there will be no impact from valuation point of view on transport expenses incurred for supply of machinery as the supplier is not the party to such supply of services. (5) Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments are includible in the value of supply in terms of section 15(2)(e) of the CGST Act, 2017. (6) Cash discount was deducted by Radiant Ltd. upfront at the time of supply on 1st August, and hence, the same is excluded from the value of supply as it did not form part of the transaction value.

Topics: Value of Supply

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