Determination of value in respect of certain supplies
Rule 6 of draft GST Valuation Rules provides for different mechanisms for valuation in various cases like value of supply of services in relation to purchase or sale of foreign currency, including money changing, booking of tickets for travel by air provided by an air travel agent, in relation to life insurance business, buying and selling of second hand goods, value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both etc.
The non-obstante clause overrides the ‘Act’ itself and this would be an overuse of the scope of Rules. Also, by declaring that the value under Rule 6 will be the value for GST, it discards the taxable person’s right to pay tax based on actual transaction value.
For example: In the case of a token or voucher, the amount paid for voucher can be lesser than the redeemable value as the transaction involves intermediaries. Since, every taxable person would be liable to pay tax even in case of vouchers; the redeemable value need not always be the actual transaction value. Tax on the difference between the cumulative amount paid and the redeemable value, if any, can be paid on redemption. If not, tax will be zero or negative in the hands of intermediaries.
It is suggested that:
• The words “notwithstanding anything contained in the Act” be removed from Rule 6 and instead the words “taxable person may opt to pay tax on the value determined under this rule” be used in its place.
• Further, in sub-rule 6 – ‘value of a token ………… be the amount actually paid for the token and not the redeemable value of the goods or services or both….’