GST invoice for service charges incl out of pocket expenses

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This query is : Resolved

CA Abhishek Singh (Querist)

24 January 2024 Hello Everyone,
A ltd is providing vehile hire service to B ltd . Diesel used for providing aforesaid service is recovered seperately at actuals ( without GST). Driver salary is paid by service recipient and recovered at actual from A ltd.
Invoice is raised as under
hire charges - 110000
Diesel - 100000
Driver salary - 10000 paid by B ltd

taxable value =100000 (110000-10000 driver salary)
sgst - 9000
cgst - 9000
total - 218000

Is the invoice correct ? if wrong is there any risk to service receiver ?
can department ask service receiver to pay gst if service provider is supposed to pay gst on higher amount ??

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

07 July 2024 The invoice provided by A Ltd. for vehicle hire services to B Ltd. raises GST law concerns. The taxable value should include all charges related to the service, including diesel charges, as they are integral to the service. The driver salary should not be included in the taxable value calculation, but clear documentation is needed. The invoice should be corrected to include diesel charges and recalculate GST, ensuring compliance and mitigating potential risks.

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