PQR Ltd., registered in the State of Karnataka, manufacturers of heavy duty machinery supplied on 10th March, 2020 Milling Machinery to JKS Ltd. for their Rice Mill set up at Chennai. Tax invoice was raised by the suppli

Computation of Transaction value in case of supply of Milling Machinery by PQR Ltd. Particulars Amount (₹) Basic price of the machinery 50,00,000 Add: Extended warranty charges (Working Note - 2) 1,00,000 Installation costs (Working Note - 3) 1,20,000 52,20,000 Less: Cash discount at 2% of price (Working Note - 4) (1,00,000) Transaction value of the Machine supplied 51,20,000 IGST at 18% on ₹ 51,20,000 9,21,600 Working Notes: As per Section 10(1)(d) of the IGST Act, 2017, the place of supply of the machine is the place of installation of the machinery, which is Chennai, in Tamil Nadu. The location of the PQR Ltd. is in Karnataka. Thus, it will be an Inter-State supply and hence IGST is payable. Extended warranty charges are includible since transaction value includes all items, except those which are specifically excluded. Installation of machine is ancillary to the principal supply of machine, thus it is a case of composite supply in terms of Section 2(30) CGST Act, 2017 and therefore the value of installation is liable to be added in the value of machine and charged to tax accordingly. 'Cash discount offered at the time of original supply in the invoice is to be deducted' as the supplier is right in assuming that the payment shall be made by the recipient within 15 days. However, once the recipient fails to make payment within 15 days, the supplier is required to issue a debit note towards the value of discount along with GST.