Case Law Details
In re Vinayak Air Products Private Ltd (GST AAR Uttarakhand)
Whether the water and electricity charges as well as the notional rent of the land, provided free of charge by BHEL, CFFP to the applicant, shall form part of the value of supply of oxygen gas by the applicant?
Section 15(2)(b) ibid specifically includes any cost incurred by the recipient of goods, in the value of supply. These free of cost items have been used in the manufacturing process of Oxygen gas. Rent free land is used for setting up of oxygen plant and free water & free electricity are consumed by the applicant in the process of manufacturing of oxygen. The charges of electricity & water consumed by the applicant during the process of manufacturing of oxygen are being borne by the recipient i.e. BHEL CFFP. The rent of land which is being used free of cost, is also not being received by the BHEL CFFP which is also an expenditure against rent. It is not necessary to first get the ownership of these free items and only then oxygen can be produced. There is no relationship between ownership and consumption. Process of oxygen production moves on only when water and electricity are consumed side by side.
8. Therefore in view of Section 15(1) & 15(2)(b) as discussed above, we have reached to the conclusion that value of rent free space alongwith free water & free electricity will form part of value of oxygen supply.
The water and electricity charges as well as the notional rent of the land, provided free of charge by BHEL CFFP to the applicant, shall form part of the value of supply of oxygen gas by the applicant in view of Section 15 of the CGST Act, 2017.
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