Applicant had received request for quotation for supply of precast Manholes by M/s Larsen & Toubro Ltd. Two basic
ingredients i.e Cement, & Steel (TMT & Bars), used for manufacturing of precast manholes were to be supplied by M/s
Larsen & Toubro Ltd.
Authority held that applicant had intention to manufacture and supply Precast Manholes and Rises and manufacturing
process submitted by the applicant itself reflected that the applicant was engaged in manufacturing of goods. Thus, the
instant transaction of supply of Precast Manholes and Rises was of supply of goods and not a supply of services.
Authority further held that since the applicant was involved in the manufacturing of Manholes and Rises and it could not be
termed as any treatment or process on the goods belonging to the recipient i.e. service of job work, even if inputs were
being supplied free of cost and these inputs wholly were being used in manufacturing of resultant goods and termed as
supply of goods not services. The authority further distinguished Circular No. 47/21/2018-GST, dated 8-6-2018 as it
pertained to an act of modification and treatment on a good wherein in the instant case of applicant, new goods were
manufactured from raw materials and not the work done on the goods belongs to recipient.
Authority further observed that since applicant is to manufacture and supply Precast Manholes and Rises as per specific
order from recipient but cement and iron was to be supplied by recipient on free of cost whereas if recipient were not to
supply main ingredients then it would have been borne by applicant. Thus, Free of cost supply of main ingredients from
recipient was nothing but mutual understanding between both parties which do not debar them from the essence of supply
of goods and consideration received under GST. Thus, it was held that by such type of adjustments applicant will receive
the consideration in barter. I.e. one consideration in the shape of price as per agreement and second in the shape of free
issue of essential inputs like cement and steels. Hence price to be charged from recipient i.e. M/s Larsen & Toubro Ltd by
the applicant for supply of precast manhole shall not be transaction value in terms of Section 15(1) & 15(2) of the CGST /
RGST Act 2017 & material which are to be made available free of cost by the recipient and are not within the scope of
applicant for supply of precast manhole shall form part of the transaction value for the purpose of levy of tax