2025-VIL-01-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Section 2(31) and Section 15 of the CGST Act, 2017 - Value of supply, goods supplied free of cost, Consideration – Applicant is engaged in the manufacture of Silver Oxide Zinc Torpedo Propulsion batteries and Secondary Silver Oxide Zinc Rechargeable Batteries and supplies them to various Naval Defence formations - The silver required for manufacturing these batteries is supplied free of cost by the Naval formations by way of supplying their used (non-serviceable) batteries - Whether the value of the silver supplied free of cost by the Naval formations (in the form of old batteries) is to be included in the taxable value adopted by the applicant on the batteries manufactured and supplied to the Naval formations for the purpose of payment of GST – HELD - The consideration for the supply of Silver Oxide Zinc Torpedo propulsion Battery is paid in terms of money and the old and used Batteries and hence, the value of the old batteries supplied free of cost by the Naval formations is required to be included in the taxable value under the provisions of Section 15(2)(b) of the CGST Act, 2017 read with Rule 27 of the CGST Rules, 2017 - the applicant's contention that the value of the free materials should not be included in the taxable value based on the terms of the agreement with the customer, is rejected – in terms of Rule 27(b) of CGST Rules, 2017, the value of the taxable supply on the issue on hand is determined from the sum total of consideration in money value including the money value of silver supplied, which is consideration in terms of used Battery - for the purpose of GST, the value of the silver supplied free of cost by the Naval formations, in the form of old batteries, is to be included in the taxable value adopted by the applicant on the batteries manufactured and supplied by the applicant – Ordered by the applicant
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