Page 34 - GSTL_23rd April 2020_Vol 35_Part 4

J62 GST LAW TIMES [ Vol. 35

VALUATION MECHANISM OF SUPPLIES BETWEEN DISTINCT PERSONS
VALUATION MECHANISM OF SUPPLIES
BETWEEN DISTINCT PERSONS AND
IMPACT ON ITC — AN OVERVIEW
VALUATION MECHANISM OF SUPPLIES BETWEEN DISTINCT PERSONS
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
MANAGING PARTNER, TAXPAYERS ADVISORY SOLUTIONS

The price of goods and services is their value ex-
pressed in terms of money. The value is the basis of
measurement to discharge tax liability and it always refers to the transaction val-
ue of goods or services. It is necessary to determine the transaction value of
goods or services as the tax is normally payable on ad valorem basis under GST.
Hence determination of the transaction value of goods or services is a critical fac-
tor in paying tax liability on ad valorem basis under GST.
Statutory provision of valuation
Section 15 of the CGST Act, 2017 and Rules 27 to 35 of the CGST Rules,
2017 contain provisions related to valuation of supply of goods and services
made in different circumstances and to different persons.
Transaction value
Under GST law, taxable value is the price actually paid or payable, pro-
vided the supplier and the recipient are not related and price is the sole consid-
eration. In most of the cases of regular normal trade, the invoice value will be
taxable value. However, to determine value of certain specific transactions, the
Determination of Value of Supply Rules have been prescribed in CGST Rules,
2017.
Distinct person under GST
Distinct persons are persons with different GSTINs belonging to one le-
gal entity (single PAN) situated within the same State or in two different States
or in a different country.
Sub-sections (2), (4) and (5) of Section 25 of the CGST Act, 2017 specifies
the following person as the distinct person :
(2) A person seeking registration under this Act shall be granted a single
registration in a State or Union territory :
Provided that a person having multiple business verticals in a State or Union
territory may be granted a separate registration for each business vertical,
subject to such conditions as may be prescribed.
(4) A person who has obtained or is required to obtain more than one regis-
tration, whether in one State or Union territory or more than one State or Un-
ion territory shall, in respect of each such registration, be treated as distinct
persons for the purposes of this Act.
(5) Where a person who has obtained or is required to obtain registration in
a State or Union territory in respect of an establishment, has an establishment
in another State or Union territory, then such establishments shall be treated
as establishments of distinct persons for the purposes of this Act.
GST LAW TIMES  23rd April 2020  154