Invoice Value Accepted for Related-Party Supplies When Full ITC Available | AAR
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- Last Updated on 29 November, 2025
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Case Details: Janaki Maha Lakshmi Traders, In re [2025] 180 taxmann.com 430 (AAR-ANDHRA PRADESH)
Judiciary and Counsel Details
- B. Lakshmi Narayana & K. Ravi Sankar, Member
-
Dhana Sai K, CA for the Respondent.
Facts of the Case
The applicant supplied cement and iron to a related proprietorship concern and sought an advance ruling on the valuation of such related-party transactions under Section 15 of the CGST Act and Andhra Pradesh GST Act. The applicant submitted that the supplies were made with consideration and that the recipient was eligible for full input tax credit, and contended that the statutory valuation mechanism for related or distinct persons deemed the invoice value to be the open market value in such circumstances. The applicant accordingly sought confirmation that the invoice value would be accepted as the value of supply. The matter was accordingly placed before the Authority for Advance Ruling (AAR).
AAR Held
The AAR held that supplies made between related persons with consideration constitute taxable supplies and that valuation is required to follow the prescribed rules applicable to related or distinct persons. The AAR observed that, under the statutory proviso governing valuation for related persons where the recipient is eligible for full input tax credit, the invoice value is deemed to be the open market value. The AAR therefore held that the invoice value shall be accepted as the value of supply for the related-party transactions in question. The ruling was issued in favour of the applicant.
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