How to Calculate Taxable Value between branch transfers for used goods or Assets

Companies having pan India presence frequently need to shift assets or goods from one branch to another and within state and interstate as well. Many people have doubt about value to be considered from GST point of View

1. Whether tax would be applicable on transportation Charges or on the goods value. Since these assets have no commercial value.

2. If GST is applicable on those goods and assets then then at what value GST will be charged.

Under GST every registered branch is a separate person. So transfers between branches is taxable.

Now the question is what should be the value of asset/goods transferred from one branch to another.

For this we have to refersection 15 of CGST Act, 2017. Sub-section 1 of section 15 of CGST Act, 2017 talks about valuation where transfer is between unrelated person. But in above case the transfer is between related persons.

Now lets read Definition of related person under GST

(a) persons shall be deemed to be related persons if

1. such persons are officers or directors of one anothers businesses;
2. such persons are legally recognised partners in business;
3. such persons are employer and employee;
4. any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;
5. one of them directly or indirectly controls the other;
6. both of them are directly or indirectly controlled by a third person;
7. together they directly or indirectly control a third person; or
8. they are members of the same family;

Point vi above puts both branches as related person since both branches are controlled by same person (definition also includes legal person).
When the goods or services are delivered or sold or supplied to related person, then value of goods shall be computed as per valuation rules:

28. Value of supply of goods or services or both between distinct or related persons, other than through an agent.-

The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5) of section 15 or where the supplier and recipient are related, other than where the supply is made through an agent, shall-

(a) be the open market value of such supply;
(b) if the open market value is not available, be the value of supply of goods or services of like kind and quality;
(c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order:

Provided that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person:

Provided further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services.

Rule 30. Value of supply of goods or services or both based on cost.-

Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services.

Rule 31.Residual method for determination of value of supply of goods or services or both.-

Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same shall be determined using reasonable means consistent with the principles and the general provisions of section 15 and the provisions of this Chapter: Provided that in the case of supply of services, the supplier may opt for this rule, ignoring rule 30.

In this case where open market value is available then consider open market value for the purpose of GST and where open market value is not available while moving goods/assets form one location to another then Nominal value of asset can be considered as where the recipient is eligible for full input tax credit

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