Orion Fuel Palanpur (Gujarat) has entered into a contract with PrimeAxis Refinery, Abu Road (Rajasthan) on 1 st July to supply 10 valves on FOR…

Computation of output tax liability of Orion Fuel for the month of July Particulars Amount (₹) List price of 10 valves (₹ 1,00,000 x 10) 10,00,000 Add: Amount paid by PrimeAxis Refinery to testing agency [Note 1] 15,000 Add: Special packing [Note 2] 10,000 Add: Erection and testing at site [Note 2] 15,000 Add: Freight [Note 3] 5,000 Value of taxable supply 10,45,000 IGST @ 18% [Note 4] 1,88,100 Notes: (1) As per section 15(2) of the IGST Act, 2017, any amount that the supplier is liable to pay in relation to a 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 shall be included in the value of supply. Since, in the given case, arranging inspection was the liability of the supplier, the same should be included in the value of supply charges for the same, however, have been paid directly to the third party service provider by the recipient. Therefore, the value shall be included in taxable value. (2) As per section 15(2) of the CGST Act, 2017, 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 shall be included in the value of supply. (3) As per section 15(2) of the CGST Act, 2017, any amount that the supplier is liable to pay in relation to a 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 shall be included in the value of supply. Since, in the given case, the supply contract is on FOR basis, payment of freight is the liability of supplier but the same has been paid by the recipient and thus, should be included in the value of supply. (4) As per section 10(1) of the IGST Act, 2017, where the supply involves movement of goods, the place of supply is the location of the goods at the time at which the movement of goods terminates for delivery to the recipient, which in the given case is Abu Road (Rajasthan). Since the location of the supplier (Gujarat) and the place of supply (Rajasthan) are in two different States, the supply is an inter-State supply liable to IGST.