In re High Energy Batteries (India) Limited (GST AAAR Tamilnadu)
Chennai, Tamil Nadu – The Appellate Authority for Advance Ruling (AAAR), Tamil Nadu, has upheld a previous ruling stating that the value of silver supplied free of cost by Naval formations to M/s. High Energy Batteries (India) Limited must be included in the taxable value of the batteries manufactured and supplied back to the Naval formations for the purpose of Goods and Services Tax (GST). The decision, stemming from an appeal against an Advance Ruling (AAR) order, clarifies the interpretation of ‘consideration’ and ‘value of supply’ under the GST Act in arrangements involving free issue of raw materials by the recipient.
M/s. High Energy Batteries (India) Limited, a manufacturer of “Silver Oxide Zinc Torpedo Propulsion batteries” and “Secondary Silver Oxide Zinc Rechargeable Batteries” supplied to Naval Defence formations, sought clarity on whether the value of silver, provided in the form of old, non-serviceable batteries by the Naval formations, should be added to the taxable value of the new batteries. The company extracts silver from these used batteries and incorporates it into the new ones. While the cost of silver extraction was included in their price, the value of the silver itself, supplied free of cost, was excluded.
