Page 210 - GSTL_21st May 2020_Vol 36_Part 3

456 GST LAW TIMES [ Vol. 36
Department. In case of option 1, the farmer himself makes the payment of con-
sideration to the applicant and the contract ends here. The receipt of any amount
received by the farmer from the Government Department has no bearing on the
price or value of the supply of goods and/or services by the applicant. The Bank
or Government Department makes payment to the applicant only on behalf of
the farmer.
6.5 As per sub-section (1) of Section 15, it is very clear that the value of
supply is the transaction value and the transaction value is defined as the “price
actually paid or payable for the said supply of goods or services or both where
the supplier and the recipient are not related and the price is the sole considera-
tion for the supply”. In the pertinent case, it is clearly evident that the applicant
and the farmer are not related persons and the price is payable by the farmer ir-
respective of the fact that he receives assistance from the government department
or not or whether the Bank makes the payment or not. The consideration of the
contract is not fixed taking into the account the amount receivable by the farmer
as financial assistance and the entire amount is invoiced. Hence price is the sole
consideration for supply and the entire invoice value would be the transaction
price.
6.6 Coming to the issue of subsidy, it is very clear that the value of
supply shall include the subsidies directly linked to the price, excluding subsi-
dies provided by the Government. The financial assistance provided by the Gov-
ernment is to the farmer to enable him to afford the facility and Government is
not making payment to the applicant vendor nor the amount receivable by the
farmer has any bearing on the price of the supply. If the subsidies provided by
the Government is directly linked to the price, then the same would be excluded
from the value of taxable supply. In the instant case, the amount receivable or
received from the Government is received by the farmer and this amount may be
received by him directly in option 1 or by the Bank in case of option 2 or by the
applicant in option 3. The farmer has a choice of either opting option 1 or option
2 or option 3 and choice of any one of the option has no impact on the price of
the supply of goods and/or services. Further, the liability of the farmer with the
applicant for the supply received by him will get extinguished only when the
applicant receives the consideration and it is immaterial from whom he actually
receives the amount and the amount received in only credited against the liabil-
ity of the farmer with him. Hence the method of receipt of payment has no bear-
ing on the price of the supply and also the receipt of payment by the applicant
from the Bank or the Government Department (on the authorization of the
farmer concerned) is on the account of the farmer only. Hence the price is inde-
pendent of the assistance amount and hence would not be covered under clause
(e) of sub-section (2) of Section 15 of the CGST Act.
7. In view of the foregoing, we pass the following
RULING
(1) The amount of assistance received by the farmer or on account of
the farmer from the Government Department has no bearing on the
price and hence on the value of supply made by the applicant to the
farmer and is not covered under Section 15(2)(e) of the CGST Act,
2017.

GST LAW TIMES  21st May 2020  210