Valuation under GST still paving way to litigations

No. PR- 202

January 22, 2021

New Delhi

Valuation under GST still paving way to litigations

“Levy of any taxes creating cascading and for which no credit is available should be scrapped”, said Mr. Bimal Jain at a Webinar on Valuation of Goods & Services organized by PHD Chamber here today. It is important to focus on cost competitiveness in domestic manufacturing as per vision of Hon’ble prime minister as ‘Vocal for Local’ & Atmanirbhar Bharat while comparing the same w.r.t to imports of goods. He urged the Government to implement IGCR (import of goods under concessional rate of duty) route for manufacturers importing Raw material for manufacturing of Finished Goods in India. Further, SEZ units should also be allowed to remove goods to Domestic Tariff Area under concessional rate of duties & taxes to promote make in India & buy in India initiative. .

He further highlighted numerous issues pertaining to valuation existing even after more than 3 years of implementation of GST. There are litigations on selling by the taxpayers at a price lower than its production/purchase cost; its implications on reversal of credit; Other issues warring clarifications include determination of Transaction Value in case of barter/ exchange sales; chargeability of GST when supplier was to incur a cost but it was incurred by recipient – whether supplier needs to include FOC supplies; whether reimbursement to be included for chargeability of GST, Issuance of Credit note on post supply incentive/ discounts, FOC supplies as samples as sales promotions activities, cross charge services & inclusion of salary costs in valuation for chargeability of GST, various sales promotional offer like ONE plus ONE, etc. . He further highlighted that in case of issuance of credit notes which come with a time lag in GST regime, can a Financial Credit Note be issued beyond time limit.

Earlier inaugurating the Webinar, Mr. Saket Dalmia, Vice President, PHDCCI urged the Government to simplify the GST Laws to pave the way for a Good & Simple Tax as envisaged by the industry at the time GST was introduced in July 2017. He highlighted issues relating to discounts; issuance of credit/ debit notes, stock transfer of goods among others. He urged the members to follow voluntary tax compliance.

Other tax experts who explained the different nuances under Valuation included Mr. Puneet Bansal, Managing Partner, Nitya Tax Associates; Mr. Jatin Harjai, Leader, JHA Legal; Mr. Tushar Aggarwal, Partner, Tattvam Advisors & Mr. Rakesh Garg, Senior Partner, SSAR & Associates. They deliberated on Valuation on Supplies between Distinct Persons/ Related Persons – Cross Charge vs. ISD; Analysis of Valuation Rules with practical case studies Covering Intricacies; Inclusions & Exclusions in Valuation; Treatment of FOC Supplies by Recipient to Suppliers; Discounts – Pre and Post Supplies GST Credit Note vs. Financial Credit Note; Inter-play of Valuation with GST ITC; among others.


Media Division

PHD Chamber of Commerce and Industry