Question asked in Mock Test Paper (IDT)
Kaya Trade Links Pvt. Ltd. is a registered manufacturer of premium ceiling fans. It sells its fans exclusively through distributors appointed across the country. The maximum retail price (MRP) printed on the package of a fan is ` 10,000. The company sells the ceiling fans to distributors at ` 7,000 per fan (exclusive of applicable taxes). The applicable rate of GST on ceiling fans is 18%.
The stock is dispatched to the distributors on quarterly basis - stock for a quarter being dispatched in the second week of the month preceding the relevant quarter. However, additional stock is dispatched at any point of the year if the company receives a requisition to that effect from any of its distributors. The company charges ` 1,000 per fan from distributors towards packing expenses.
The company has the policy to offer a discount of 10% (per fan) on fans supplied to the distributors for a quarter, if the distributors sell 500 fans in the preceding quarter. The discount is offered on the price at which the fans are sold to the distributors (excluding all charges and taxes).
The company appoints Prakash Sales as a distributor on 1st April and dispatches 750 fans on 8th April as stock for the quarter April-June. Prakash Sales places a purchase order of 1,000 fans with the company for the quarter July-September. The order is dispatched by the company on 10th June and the same is received by the distributor on 18th June. The distributor makes the payment for the fans on 26th June and avails applicable input tax credit. The distributor reports sales of 700 fans for the quarter April-June and 850 fans for the quarter July-September.
Examine the scenario with reference to section 15 of the CGST Act, 2017 and compute the taxable value of fans supplied by Kaya Trade Links Pvt. Ltd. to Prakash Sales during the quarter July-September.
Answer by ICAI
Value of taxable supply of fans for the quarter July-September [` 7,300 x 1,000]=73,00,000
My view
As per Sec 12, time of supply is earliest of following
a) date of issue of invoice (not given in this case) OR
b) the last date for issue of invoice u/s 31(1) ie before at the time of removal of goods ie 10th June 2018 in this case
c) the date on which supplier receives the payment (not given in this case)
Thus value of supply in quarter July-September should be NIL because time of supply as per above provision should be June quarter.
Just guide me, if I am wrong
CAclubindia
