RP Manufacturers Ltd., registered in Mumbai (Maharashtra), is a manufacturer of footwear. It imports a footwear making machine from USA. RP Manufacturers Ltd. enters into a contract with Kartik Logistics, a licensed cust

CS Professional · Advanced Tax Laws · PYQS · December 2022
RP Manufacturers Ltd., registered in Mumbai (Maharashtra), is a manufacturer of footwear. It imports a footwear making machine from USA. RP Manufacturers Ltd. enters into a contract with Kartik Logistics, a licensed customs broker with its office at Ahmedabad (Gujarat), to meet all the legal formalities in getting the said machine cleared from the customs station. Apart from this, RP Manufacturers Ltd. authorises Kartik Logistics to incur, on its behalf, the expenses in relation to clearance of the imported machine from the customs station and bringing the same to the warehouse of RP Manufacturers Ltd. expenses shall be reimbursed on the actual basis in addition to agency charges. Kartik Logistics provided following details in the invoice issued by it to RP Manufacturers Ltd. : S. No. Particulars Amount (₹) (i) Agency charges 4,00,000 (ii) Unloading of machine at Kandla port, Gujarat 45,000 (iii) Charges for transportation of machine from Kandla port, Gujarat to Kartik Logistics' godown in Ahmedabad, Gujarat 25,000 (iv) Charges for transportation of machine from Kartik Logistics' Ahmedabad godown to the warehouse of RP manufacturers Ltd. in Mumbai, Maharashtra 31,000 (v) Dock dues paid 60,000 (vi) Port charges paid 30,000 (vii) Prepared and submitted Bill of Entry and paid customs duty 6,00,000 (viii) Hotel expenses 47,000 (ix) Travelling expenses 48,000 According to GST law, compute the value of supply made by Kartik Logistics with the help of given information. Note: All amounts are exclusive of GST.

Answer & Explanation:

Value of Supply made by Kartik Logistics is as follows: Sr. No. Particulars Amount (₹) (i) Agency Charges 4,00,000 (ii) Add: Unloading of Machine at Kandla Port, Gujarat NIL (iii) Add: Charges for transport of Machine from Kandla Port, Gujarat to its godown in Ahmedabad, Gujarat NIL (iv) Add: Charges for transport of Machine from Kartik Logistics' Ahmedabad godown to the warehouse of RP Export Import House in Mumbai, Maharashtra NIL (v) Add: Customs Duty NIL (vi) Add: Dock Charges NIL (vii) Add: Port Charges NIL (viii) Add: Hotel Expenses 47,000 (ix) Add: Travelling Expenses 48,000 Value of supply 4,95,000 Explanation: In the given case, Kartik Logistics has entered into a contractual agreement with recipient of supply, RP Manufacturers Ltd., to incur, on behalf of such recipient, the expenses mentioned in S. No. (ii) to (vii) incurred in relation to clearance of the imported machine from the customs station and bringing the same to the warehouse of the recipient. Further, Kartik Logistics does not hold any title to said services and does not use them for his own interest. Kartik Logistics receives only the actual amount incurred to procure such services in addition to agency charges. Kartik Logistics is a pure agent of R P Manufacturers Ltd. Therefore, the expenses incurred by Kartik Logistics as a pure agent (items ii to vii) are excluded from the value of supply. However, hotel expenses and travelling expenses are not incurred as a pure agent and hence are included in the value of supply.

Topics: GST

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