The amortised cost of FOC Re supplied tools shall be added to the value of Supply : AAR

The amortised cost of FOC Re supplied tools shall be added to the value of Supply : AAR | Ruling by Karnataka Authority of Advance Ruling in matter ofNash Industries (I) Pvt Ltd.The amortised cost of tools which are re-supplied back to the applicant free of cost shall be added to the value of the components while calculating the value of the components supplied as per the Section 15 of the CGST / SGST / IGST Act 2017.

The amortised cost of FOC Re supplied tools shall be added to the value of Supply : AAR

Please read the extract of Advance Ruling for better understanding : In the instant case the applicant and the recipient enter into an agreement where the applicant is required to supply certain components. These components require specialized tools for their manufacture. The tools could be either manufactured by the applicant himself or they could get it manufactured by someone else or the recipient could supply them free of cost. In case the applicant procures the tools from a third party, then they would incur a cost and the cost could be included in the value of taxable supply to the recipient. There is no scope of any dispute in this situation about the fact that the cost of the tools is an essential element to be included in the cost of the component finally supplied by the applicant. This is also because without the tools the final component could not have been manufactured. However, when the first or third situation prevails, then theapplicant has not spent any amount in respect of the tools. Nevertheless the applicant could not have manufactured the components without the tool. Here the cost the tool is borne by the recipient of the supply whereas the same should have been borne by the applicant, as evident from the situation discussed above, (where the applicant procures the tool from a third party). Therefore we are of the considered opinion that the facts and circumstances of the transaction put forth by the applicant invite the play of Section 15(2)(b) of the CGST Act 2017 in their transaction. 5. In view of the foregoing, we rule as follows : Click Here to Buy CA Final Pendrive Classes at Discounted Rate

RULING

The amortised cost of tools which are re-supplied back to the applicant free of cost shall be added to the value of the components while calculating the value of the components supplied as per the Section 15 of the CGST / SGST / IGST Act 2017.

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