Sampat & Mehta GST - FAQ

Transcription

1 Sr. No. Particulars Suggestions 1. What documents are required to accompany movement of Goods outside own premises E Way Bill to be generated from GSTN Portal before or at the time of movement of Goods Till E Way Bill mechanism is not operational carry Jangad / Delivery challan having details of Goods and its Value 2. Raw Material Send for Manufacturing or sent for Final Process or for Part Process to Own Factory/Branch Supply to related or distinct person is included in Schedule I [Activities to be treated as Supply even if made without Consideration] But, if Goods are send under Intimation to the concerned officer at the time of supply and specified conditions are satisfied then GST is not payable on the value of Goods supplied [Section 143 of CGST Act] Own Factory will have to send Goods [RM/SFG/FG] back within 1 year along with Invoice of Labour GST to be added on Labour Invoice even if it is to same entity If Goods are not send under Intimation then GST on Value of Goods to be charged 3. Raw Material Send for Manufacturing or sent for Final Process or for Part Process to Third Party Supply of Goods to third party is not covered under the Scope of Supply Job Worker will send Goods [RM/SFG/FG] back within 1 year along with Invoice of Labour which includes GST If Goods are not sent under Intimation or not received back within 1 year then GST payable on Value of Goods. 4. Goods are send for QC to External Company Supply of Goods to external company for QC does not fall under the Scope of Supply and hence no GST Payable at the time of Supply External Company will have to raise service charge invoice with GST

2 5. Goods send for preparation and marking to own factory Preparation and Marking is a Process on goods so it can fall under the definition of Job Work If Goods are send under Intimation to the concerned officer at the time of supply and specified conditions are satisfied then GST is not payable on the value of Goods supplied [Section 143 of CGST Act] Own Factory will have to send Goods [RM/SFG/FG] back within 1 year along with Invoice of Labour GST to be added on Labour Invoice even if it is to same entity If Goods are not send under Intimation then GST on Value of Goods to be charged 6. Goods send for preparation and marking to External Party Preparation and Marking is a Process on goods so it can fall under the definition of Job Work Supply of Goods to third party is not covered under the Scope of Supply Job Worker will send Goods [RM/SFG/FG] back within 1 year along with Invoice of Labour which includes GST If Goods are not sent under Intimation or not received back within 1 year then GST payable on Value of Goods. 7. Finished Goods sent to Branch for Sale Scope of Supply [Schedule I] covers Supply to related person or distinct person without consideration So, when Finished Goods are sent to Branch for Sale it will be subject to GST Supplier will raise Invoice on his branch and charge GST on Value of Goods

3 8. Goods Purchased on earlier date and invoice is received later, then ITC is eligible at the time of receiving Goods or at the time of receipt of Invoice No registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless :- o He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed o He has received the goods or services or both o He has furnished the return under section 39 o Subject to the provision of Section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply In such a case, ITC will be available when receiver received Goods and Invoice both. 9. Goods sent to Own Factory for Assortment Job Work means treatment or process by one person on the goods of another registered person [Section 2(68) of CGST Act] Process is nowhere defined under the GST Act. As per the dictionary, Process means a series of action or step taken in order to achieve a particular end (Noun) and another meaning is to perform a series of mechanical or chemical operations on something in order to change or preserve it (Verb) Based on conservative approach, Assortment activity may not fall under the definition of Job Work and hence when Goods are send to own factory for Assortment would attract GST Levy. If Goods are to be boiled (which is a chemical operation) then it can be argued that Assortment is also a part of Job Work. Tribunals in the past have taken a view that even visual inspection to the Goods is a Process

4 10. Goods send to third Person for Assortment Goods send for Assortment to third party is neither sale, transfer, barter nor is a supply to related parties without consideration. Therefore, it is not within the perview of Scope of Supply and GST is not leviable on Value of Goods supplied. So, support of argument given in FAQ No.9 is not required Service provider to charge GST on the Value of Services rendered Advisable to receive back the Assorted Goods within 1 year 11. Goods send to Agent for Sale under Consignment Scope of Supply [Schedule I] specifically covers Goods sent to Agent for Sale without consideration. [Activities to be treated as Supply even if made without Consideration] So, Supply to Agent is subject to GST Principal will raise the Invoice on Agent with GST levy on Value of Goods supplied 12. Goods send for Exhibition in Hotel Registration as a casual taxable person need to be taken in the State where exhibition is going to be conducted Advance payment need to be done on Estimated Sale 13. Employee carry Goods for Sale to other state E Way Bill to be generated for the movement of Goods If Goods are sold in other state then Invoice to be raised applying IGST If Goods are returned, then no GST. Only E Way bill to be generated

5 14. Goods send for Sale to unrelated customer on Approval Basis Goods send to customer on Approval basis does not fall under the Scope of Supply as it is not a sale, transfer, barter nor it is a supply to related persons or Agent. Hence, GST is not leviable on supply Confirmation or Goods must be received within 6 months of delivery else GST leviable from the Original delivery date If Confirmation is received within 6 months, GST is leviable on the date of confirmation 15. Goods are billed to Foreign Party but delivered / shipped at his instruction to another Party in Mumbai / other State When goods are supplied on the Direction of Third Party then location will be the place of that third party [Section 10 of IGST Act] Export means taking goods out of India to a place outside India [Section 2(5) of IGST Act] As in this case, the Goods are not moving out of India. So, it is not an Export. IGST to be charged in the Bill whether Supply is within state or outside state 16. Goods are billed to Foreign Party but delivered / shipped at his instruction to another Party in SEZ When goods are supplied on the Direction of Third Party then location will be the place of that third party [Section 10 of IGST Act] Supply to SEZ on the direction of Foreign Party IGST to be charged in the Bill 17. Goods are billed to Party in Gujarat but shipped to another Party in Mumbai at the instruction of Gujarat Party When goods are supplied on the Direction of Third Party then location will be the place of that third party [Section 10 of IGST Act] IGST to be charged in the Bill

6 18. Goods send for Manufacturing and Part Material are purchase by Job Worker (not related) and added to the Goods supplied GST is payable on value of Goods supplied (i.e Value of Goods received from customer + Value of Goods added by him + Job Work charges) To avoid above controversy of levying GST in material supplied by the Principal, it is advisable that Job Worker raises separate Invoice for the goods it is adding (Other than small value of consumable items) & separate invoice for Job Work charges 19. Any Services to a person located outside India Export of Service is defined under section 2(6) of IGST Act Since, Service is given to a person located outside India then No GST to be charged in the Invoice However, consideration is to be received in convertible Foreign Exchange 20. Any Services imported from a person located outside India Import of Service is defined under section 2(11) of IGST Act. Importation of Service with consideration or without consideration is covered under the scope of supply GST is payable by the recipient of the services subject to relaxation provided for certain specified services 21. Raising Debit Note by Holding Company in relation to sharing of Common Services of Subsidiary Company or Group Company (Example : Payroll Cost, Insurance Premium, IT Infrastructure) It will be subject to GST No clear answer available. If GST is not levied by the Holding Company, it may loose ITC on the amount received back from Subsidairy Company without GST charge. Therefore, it is advisable to charge GST while raising Debit Note on group activities Alternatively, request service provider to raise separate invoice on respective group entity so that smooth ITC is available.

7 22. Import of Goods Place of Supply of Goods during Imports is that of Location of Importer [Section 11 of IGST Act] Importer has to pay IGST under Reverse charge along with Basic Custom Duties in lieu of CVD/SAD IGST Paid under Reverse Charge will be available for Set Off against the Outward liability of IGST, CGST and SGST 23. Exporting Goods outside India Place of Supply of Goods during Exports is that of Exporter [Section 11 of IGST Act] Exports of Goods or Services or both is covered under Zero rated Supply. [Section 16 of IGST Act] During Exports, Exporter is not liable to pay any GST. But, Exporter is eligible to take Input Tax Credit of his Inward Supplies 24. Supplying Goods to SEZ Unit Place of Supply of Goods where supply involves movement of Goods shall be the location of the goods where the movement of goods terminates for delivery to the recipient [Section 10 of IGST Act] Supply of Goods or Services or Both to SEZ Unit is covered under Zero rated Supply [Section 16 of IGST Act] During Supply of Goods or Services or Both, the Supplier is not liable to pay any GST But, Supplier is eligible to take Input Tax Credit of his Inward Supplies 25. Local Sale in USD Place of Supply of Goods where supply involves movement of Goods shall be the location of the goods where the movement of goods terminates for delivery to the recipient [Section 10 of IGST Act] During Supply of Goods, if Supply within State then CGST and SGST to be levied and if Supply is made outside state then IGST to be levied by Supplier

8 Supplier is eligible to take Input Tax Credit of his Inward Supplies. 26. Sale within Same State (Intra-State Supply) Place of Supply of Goods where supply involves movement of Goods shall be the location of the goods where the movement of goods terminates for delivery to the recipient [Section 10 of IGST Act] During Supply of Goods, Supply within State then CGST and SGST to be levied by Supplier Supplier is eligible to take Input Tax Credit of his Inward Supplies 27. Sale in Different State (Inter-State Supply) Place of Supply of Goods where supply involves movement of Goods shall be the location of the goods where the movement of goods terminates for delivery to the recipient [Section 10 of IGST Act] During Supply of Goods, Supply between different State then IGST to be levied by Supplier Supplier is eligible to take Input Tax Credit of his Inward Supplies. 28. Delivery takes place through the Broker Same provisions as for sale within state & outside state shall apply 29. Delivery to the Party on Jhangad Depending on purpose of delivery i.e for Job Work, Sale to Customer, for Consignment, then respective related provisions shall apply. 30. Unit is located in SEZ and Inward Supply is from Unregistered Supplier Place of Supply of Goods where supply involves movement of Goods shall be the location of the goods where the movement of goods terminates for delivery to the recipient [Section 10 of IGST Act] Supply of Goods or Services or Both to SEZ Unit is covered under Zero rated Supply [Section 16 of IGST Act]

9 During Supply of Goods or Services or Both, the Supplier is not liable to charge GST But, Supplier is eligible to take Input Tax Credit of his Inward Supplies if it is purchased from the registered supplier If Supplier is unregistered then no GST payable under Reverse charge Mechanism 31. Shop and Establishment Registration in Chennai and is only providing Support Service to the head Office in Mumbai In this case, Chennai office is distinct person from Mumbai Office. So, Chennai office to charge GST on rendering of services to Mumbai office at Open Market Value (OMV) If OMV is not available then OMV of like kind and quality to be taken but if OMV of like kind and quality is not available then charge GST on 110% of the cost of services rendered. 32. Is it required to follow a particular series of Invoicing Rule 7 of Invoicing Rules, a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolized as _ and / respectively, and any combination thereof, unique for a financial year For Example : April/17-18/01 or 01/17-18 or Export/April/17-18/01 or April/17-18/50 But for the month of May new series cannot be started i.e to continue old services. For Example : May/17-18/ If Goods are send for testing and service tax is paid before the appointed date and later after the appointed date the goods are exported then can service tax be refunded Service tax is paid under earlier law, then it can be transferred to GST as per Section 140 of CGST Act A registered person, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed [Section 140 of CGST Act]

10 So, when Export is done in GST Regime at that time refund can be claimed Refund cannot be asked under earlier law 34. Registered Office is in Maharashtra & Hotel is located in Kerela. At registered Office there is no Business Activity. Do we need to take Registration in Maharashtra? Every supplier is liable to be registered under this Act in the State or Union Territory from where he makes a taxable supply of Goods or Services or both, if his aggregate turnover in a Financial year exceed INR 20,00,000 [Section 22 of CGST Act] In this case as in Maharashtra no Business Activity is carried on i.e no taxable supply is made. So, no need to take Registration in Maharashtra 35. One Manufacturing Unit is in Mumbai and another Unit is in SEZ. Both Units are in same / different Business Activity. Do we have to take Separate Registration for SEZ Unit? Yes, Separate registration is required Proviso to Rule 1(1) of Registration Rules states, that Special Economic Zone Unit or Special Economic Zone Developer shall make a separate application for registration as a business vertical distinct from its other units located outside the Special Economic Zone 36. Our Registration is in Maharashtra but our supplier charged us Delhi SGST & CGST. Can we claim the Credit of Delhi SGST? Normally such kind of situation will not arise unless delivery is taken in Delhi Under GST Act, there is no state wise Tax to be paid. Three kind of Tax i.e CGST, SGST and IGST to be charged So, CGST & SGST of Delhi purchases will be available for set off against outward liability However, when your registration is in Maharashtra, Delhi supplier should charge IGST 37. If a Car Dealer, while selling a car, Gifts Jewellery item to its customer. Is it required to charge separate GST on Gift of Jewellery Item? In ordinary course, Value of Jewellery which is gifted is already included in the value of Car charged to the customer. So, no separate GST leviable on Jewellery Supply

11 Independently, gifting of any items would not fall under any of the provisions of Scope of Supply and hence no GST leviable However, Supplier has to reverse the ITC on item gifted 38. Whether to take separate Registration for Taxable and Exempt Supply It is recommended that separate registration is taken for Taxable and Exempt Supply provided both the registration is based on separate PAN Separate Registration will ease in the maintenance of records and taking ITC 39. Purchases made from URD Supplier. Any GST payable? If Purchaser is registered person then he has to pay GST on Value of Purchases at applicable rate under Reverse charge Mechanism GST paid is available as ITC in next period If Purchaser is also unregistered person then no GST payable 40. What method of Accounting should be followed to claim ITC on various Purchases? It is recommended that Mercantile Method of Accounting be followed, whereby first expenses are booked and payment is routed through Parties account Monthly return is required to be filed by every supplier so if cash basis is followed then mismatch will arise at regular intervals and it will take time to get it resolved 41. Car is purchased in the name of director but lying in the books of the Company. When the Company sales the car should it levy GST? Scope of Supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business [Section 7 of CGST Act] Car is lying in the books of the company so when company sales the car it will be subject to GST

12 42. Centralized Service Tax Registration is obtained under Finance Act, Branch Offices in Delhi & Bangalore and also Employee operate from Home in Chennai and Ahmedabad. But, all Invoices are raised form Mumbai. Whether Registration is required to be taken in each State? Every supplier is liable to be registered under this Act in the State or Union Territory from where he makes a taxable supply of Goods or Services or both, if his aggregate turnover in a Financial year exceed INR 20,00,000 [Section 22 of CGST Act] In this case, if Offices in Delhi, Bangalore, Chennai and Ahmedabad is making an outward supply of taxable services from that state then Registration in each state is required. Every place of activity in all the states would be regarded as Fixed Establishment of that Company, when such places are rendering services to clients from that location Care needs to be taken to charge appropriate GST i.e IGST, CGST and SGST depending on the Place of Supply 43. Purchase of Network Services from Unregistered dealer. So, do receiver of service have to pay GST under Reverse Charge Basis? GST on Supply of Taxable Goods or Services or both by Supplier who is not registered to a registered person shall be paid by recipient of such service under Reverse Charge Basis [Section 9(4) of CGST Act & Section 5(4) of IGST Act] So, Purchase of Network Services from Unregistered dealer is also subject to Reverse charge 44. Is GST payable on Imports of Free Samples from Holding Co. located in Germany Scope of Supply provisions requires GST payment when services are imported without consideration from related person. Thus, importation of Goods without consideration is not subject to GST

13 45. On what Value GST is payable while making Supply :- (i) To Related Party (ii) To anyone when Goods supplied is partly Manufactured Under Valuation Rule, when Transaction is with unrelated party, GST is payable on Transaction Value (i.e Value stated in the carrying documents) When Partly Manufactured Goods are supplied, Value of Goods should include RM Cost + Labour Charges for the poration of Manufacture completed For Supply to related Party, Transaction Value should be Open Market Value (OMV). If OMV is not available then use Value of the like Kind and Quality. But if that is also not available then Transaction Value should be 110% of the Cost of Acquisition / Manufacture