Page 208 - GSTL_21st May 2020_Vol 36_Part 3

454 GST LAW TIMES [ Vol. 36
ceives assistance from the Government or not, the
farmer is liable to pay the full consideration to the
vendor applicant. There is no privity of contract be-
tween the applicant vendor and the Government De-
partment.
(2) Option 2 : The farmer concerned takes loan from
Banks or financial institutions and it is these banks
which finance the project, either as a standalone pro-
ject or as a part of a bigger project. The Banks pays
the consideration to the vendor applicant for the
supply of materials from the loan account of the
farmer and the financial assistance provided by the
Government Department is directly credited to the
loan account of the farmer. Even in this model, there
is no privity of contract between the vendor applicant
and the Government Department in deciding the
price and also not even with the Bank. The contract is
only between the farmer and the vendor applicant
and whether the farmer receives assistance from the
Government or not, the farmer is liable to pay the full
consideration to the vendor applicant. The Bank pays
the full amount billed by the applicant vendor and
the farmer shall be liable to pay the full consideration
to the vendor applicant if Bank does not make the
payment.
(3) Option 3 : The farmer pays 10% of the consideration
to the applicant vendor and the applicant vendor
bills the entire value and the remaining amount is
given on credit. The farmer then gives a no-objection
certificate to the Department concerned that if the as-
sistance is sanctioned to him, the 90% of the amount,
i.e. the entire assistance amount may be paid to the
applicant vendor on his account. The Department on
sanction of the amount of assistance would make the
payment to the applicant vendor on account of the
farmer as per his directions. In case, the farmer is not
sanctioned any assistance or in default, the entire
balance amount is recoverable from the farmer by the
applicant vendor. Here the vendor applicant invoices
the full value of the commodities to the farmer and
the privity of contract is only between the farmer and
the vendor applicant.
(b) Hence the Learned Representative stated in all the three options
supra, the contract is for supply of goods and/or services between
the farmer and the applicant vendor and the value of the supply is
the entire invoice value. The financial assistance received by the
farmer has no bearing on the price of the contract and the farmer is
liable to pay the consideration irrespective of the receipt of financial
assistance or not. The consideration received by the applicant may
be from himself as in option 1 above or from the Bank on account of
GST LAW TIMES  21st May 2020  208