Case Law Details
In re Bharat Heavy Electricals Ltd. (GST AAR Uttarakhand)
In case where goods are supplied within India and billing is to be done in foreign currency, which exchange rate to be applied rate prescribed for export of goods or for import of goods?
On perusal of legal provisions (supra), we observe that “Transaction Value” is the basis for valuation for supply of goods and/or services under the GST Regime. For the levy of tax, first we have to determine the transaction value. Transaction Value’ is the price actually paid or payable for supply of goods and/or services. We also observe that Section 15 of the Act provides the provisions for determining the value of goods and services. It provides the mechanism to know how to calculate the value of goods or services when supply of goods and services is made between unrelated persons and when the price is the sole consideration of the supply. We further observe that the provisions of the value of supply under CGST Act have also been made applicable to IGST Act vide Section 20 of the IGST Act, 2017. We also observe that when it is not possible to calculate value of supply as per section 15 of the Act , the value of taxable supply is to be calculated as per the relevant Rules of Chapter IV of CGST Rules, 2017 which deals with the determination of value of supply. Since the issue in hand is related to valuation of goods supplied within India and billing is being done in foreign currency, thus Rule 34 of the Rules is to be applied Now the question arises which rate of exchange (import or export) shall be applicable as notified by the Board under section 14 of the Customs Act, 1962, to determine the value of goods.
We find that in exercise of the powers conferred by Section 14 of the Customs Act, 1962, the Government of India issued notification time to time to determine the rate of exchange of conversion of the foreign currencies relating to imported and export goods. In this context, we have peruse the letter dated 23.12.2019 of the applicant wherein they intimated the authority that normally the foreign currency price in the contract is to cover imported content of the material used in setting up of Power Station in India wherein Indian company usually imported goods, make foreign currency payment to their supplier, in turn foreign currency from the customer. Thus we observe that in the present case rate of exchange of imported goods shall be applicable in as much as the foreign currency price in the contract is to cover imported content of the material used for intended purpose.
In view of the above, we pass the following order:
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