AAAR: GST Must Include Value of Free Silver Supplied by Navy

The applicant, High Energy Batteries (India) Ltd., located in Mathur Industrial Estate, Tamil Nadu, is engaged in the manufacture and supply of Silver Oxide-Zinc Torpedo Propulsion Batteries and Secondary Silver Oxide Zinc Rechargeable Batteries to various Naval Defence formations (Indian Navy) on payment of applicable GST.

The applicant sought an advance ruling on “Whether the value of the Silver supplied free of cost by the Naval Formations (in the form of old batteries) are to be included in the taxable value adopted by the applicant on the batteries manufactured by the applicant and supplied to the Naval Formations for the purpose of payment of GST or not?”

AAR Decision

The AAR (Authority for Advance Ruling) gave its decision in Order No. 28/ARA/2024 dated 06.12.2024, saying that the value of Silver given free of cost by the Navy must be included in the taxable value of the batteries for GST purposes.

However, the company was not satisfied with this decision, and it presented this matter to the Appellate Authority for Advance Ruling (AAAR).

AAAR Order

The Authority for Advance Ruling (AAAR) agreed with the decision of AAR. It stated that the value of free-supplied Silver must be included in the taxable value. It ruled that the Silver, being an essential raw material supplied by the recipient, is non-monetary under Section 15(2)(b) and Section 2(31) of the CGST Act. Therefore, it must be added to determine the taxable value.