Value of supply- Section 15 of CGST Act- The present application has been filed by the applicant seeking an advance ruling in respect of the following question.

NHAI has awarded a contract for construction of road to the applicant vide letter dt 01.05.2017 for agreed price of Rs. 65,90,98,099/- which included VAT Tax as tender was awarded before the appointed date. However, during the course of completion of service, i.e. construction of road as per contract, there happens escalation in value. Such escalation in value is added to the contract value as per the terms of the tender notice which read as under: 19.10.04:- The contract price shall be adjusted for increase or decrease in rates and price of labour, cement, steel, plant, machinery and spares, bitumen, fuel and lubricants and other material inputs in accordance with the principles, procedures and formulae specified therein. Question based on these facts is as to whether such escalated value shall be added to the taxable value u/s 15 of the act or otherwise?

As per the applicant's submissions, there was no supply during the pre-GST period and no invoice was also raised during the said period. The impugned service was provided entirely during the GST period and therefore in view of Section 13, the time of supply is during the GST era and therefore for ascertaining the value of service, the relevant provisions of CGST Act, 2017 shall apply.

Section 15 (1) says that the value of a supply of goods or services or both shall be the Transaction value and the transaction value in the subject case will also include the escalated value (as per the impugned contract), which is being recovered from NHAI by the applicant, both being unrelated parties. Therefore, such escalated price/value which is added to contract price shall be liable for payment of GST as per the said provision of Section 15 of the Act.

Held that- The escalated value shall be added to the original value of the contract and the total of the escalated value plus the original value of the contract will be the transaction/taxable value u/s 15 of the Act, on which GST must be discharged by the applicant.