Applicability of tax invoice for goods sent to exhibition in another state

468 views 2 replies

Naveen Kumar Jain

Chartered Accountant

641 Points Joined April 2008

A registered (Delhi) person is participating in an exhibition in another State (W.Bengal) for display of his goods (apparels) and designs and to get orders for custom supply, duly tailored and embroidered as per customer needs. He takes casual registration in W. Bengal where exhibition is held. The apparel are later supplied from the place of business (Delhi) and charges IGST on invoice value. While most goods are for display, a few pieces are also sold at the exhibition and tax invoice for the same are issued under casual registration (W. Bengal) with CGST and SGST.

My query is whether a tax invoice is essential to be raised by the dealer (regular registration GSTN- Delhi) on Self with Casual registration GSTN (W.Bengal) for goods eventually sold at the exhibition at Kolkata. How can a person invoice (sell) goods to himself? How will he account for the same? How can it be treated as supply when receipient and supplier are same legal entity? It will also create a difference in Sale (Turnover) as per ITR and GST, since GST turnover will get accounted twice for goods sold at the exhibition, in case a tax invoice is raised.

Views of experts and distinguished members are solicited.

Replies (2)

Pankaj Rawat

GST Practitioner

55062 Points Joined June 2017

Dear Naveen

you need clarification on Following :

1. Whether Tax Invoice is essential in case regular dealer on Self with Casual registration. How can it be treated as supply when Receptient & supplier are same legal Entity. .....& so on....

Reply :
Yes ,. .. As per Section 25(4) of CGST Act . the person who has obtain more than one registration whether in one state or more then one state in respect of each such registration , BE TREATED AS DISTINCT PERSON for the purpose of this Act ,
And as para 2 of schedule I ,it's supply when any supply of good or services or both between distinct or related person .

Now going through above sections It's an supply & Tax Invoice is to be issue mandatory as prescribed in Section 31 , read with Rule 46 of CGST Act .

Example : In case of Branch transfer Tax Invoice need to be issued.

2. It's will create a difference in Sale ( turnover) As per ITR & GST.

Reply :
Now let me explain the same by illustration:

Regular Dealer Delhi issue Bill for Rs 1000/- to Casual Taxable Person & let suppose out of which 600/- worth of Goods (including profit rs 100) being sold in exhibition. Now remaining stock in hand with CTP is Rs. 500/- to move that stock from WB to Delhi the CTP has Option either Raise bill to Delhi or Raise debit note for Goods return to Delhi.

So when consolidated balance sheet will be prepare:
Delhi sold goods worth of 1000/- to CTP will be contra by Showing as purchase of 1000/- & Sold as of 1000/- (Just like transaction of head office sold & branch purchase )

& Only sale of 600/- will be considered as pure sale of CTP /RD out of stock of Rs.1000/- .

Naveen Kumar Jain

Chartered Accountant

641 Points Joined April 2008

Dear Pankaj,

As per example given by you, invoice by Regular dealer on CTP is 1000/- Credit note by Regular Dealer is 500/- for returned goods from Exhibition. So net sale by Regular dealer is 500/- CTP raises an invoice for actual Sale of 600/- which is ok. CTP also records 1000/ as PURCHASE and 500 as Purchase Return. So on basis of documents (Invoices and credit note) regular dealer books will show a net sale of 500/- and CTP will show sale of 600/-. Hence on consolidation sale will be of 1100/- At the same time CTP will show a Purchase on the basis of Incoming Invoice of 1000/- and apurchase return of 500/- which on consolidation will become purchase of 500/- Thus on consolidation Sale and purchase both will show inflated figure by 500/- . This will need to be adjusted by some journal entry or otherwise. Unnecessary documentation and reconciliation problem for sole propritership and small dealers! It may also impact cash flow, as GST will be paid on 1000/-, then on 600/- (can take ITC) and also pay GST on returned goods of 500, and then regular dealer will take ITC for 500/-value returned goods. So pay in total GST on 2100/- and get ITC on 1500/- with some time gap. So for a transaction of sale of 600/- pay gst on 2100/- then get itc on 1500/- What a round about way?