Gst to be charged or not?

228 views 7 replies

Dhrunil Bhatt

Chartered Accountant

232 Points Joined July 2014

Dear Experts,

I am giving you one example here in which lets say there are three companies (Company A, Company B and Company S). Company A and B are inter companies (under a roof of a group company). The company S is a customer company which is located in SEZ Unit.

Now lets suppose company S, the customer company wants services from company A. In order to provide the service, Company A raised a service PO on Company B for the providing the service to Company S (which is the customer of Company A).

Company B provided the service to company S against the service PO raised by company A.

Now, as Company S is located in SEZ unit, invoice would be raised by company A to Company S without charging IGST in the invoice (under a LUT / Bond).

The question is, how would the invoice be raised by Company B on Company A for the services provided. Note that none of these companies (A or B) are located in SEZ Unit. Whether company B would raise the invoice normally (i.e. by charging IGST) on Company A or it would not charge any GST (as the ultimate sale was made to SEZ Unit)

My opinion is that GST shall be charged by Company B in the invoice issued on Company A.

Kindly support your answer with relevant provisions of the Act.

Thanks and Regards,

Dhrunil Bhatt

Replies (7)

Padmanathan Kv

2127 Points Joined October 2017

GST should be charged by Company B. However company A can claim refund of the ITC

Pankaj Rawat

GST Practitioner

55062 Points Joined June 2017

Yes GST will charge by Company B to A in Tax Invoice raised

CA Shikha Sharma

Ceo

3869 Points Joined February 2019

yes by company a

A Kalita

Sr. Manager

22 Points Joined May 2019

Dear Experts,

I have a GST scenario I am describing below, and looking for suggestions from you.

I have procured cement for Rs1 lakh from a dealer after paying GST. Then I have issued a part of that quantity of cement to a contractor who was awarded a contract to build a concrete house. The rest of the items and manpower was arranged by the contractor. Say the value of cement issued to him is 50 thousand.

Now the contractor has submitted a bill of Rs. 5 lakhs as per schedule of rates which included cost for Sand, Stone Chips, Steel etc ( all items apart from Cement) and Service Charges for the manpower ( Including his profit). He has claimed GST on the total amount of 5 Lakhs.

The value for the Cement issued to him will be deducted from the Contractor’s Bill.

Now, Do I deduct the GST portion for cement from his bill, since I have already paid the GST for cement? Or I have to pay GST on the total amount of 5 lakhs? (The rates for GST are different in contractors bill and for cement)