Price should be ‘sole consideration’ :
The term ‘price is sole consideration’ has been copied from valuation provisions in excise, customs and service tax.
This is likely to create issues of valuation in respect of patterns, tools, dies, free material etc. supplied by recipient (customer). Issue of ‘reimbursement of expenses’ will also arise.
Addition of these amounts to ‘value’ is against the concept of Vat as some costs will be added to ‘value’ on which the supplier will not be able to avail any input tax credit.
It can be added that GST is on ‘supply of goods and services’. The scope of ‘supply’ is a contract between supplier and recipient. Only those elements of cost will form ‘value’ which are in the contract of scope of supply.
The tax is on ‘supply’ and not on ‘goods’. Thus, only what is supplied should be added to ‘value’.
In Central Excise, if the buyer has supplied toolings, its cost has to be amortised and included in assessable value. In Moriroku UT India v. State of UP (2008) 224 ELT 365 = 15 VST 559 (SC), it has been held that there is no similar provision of adding cost of additional consideration in UP Trade Tax Act and hence such cost is not addible.
In my view, this is applicable in GST also. However, chances of litigation cannot be ruled out.