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Gst to be charged or not?


Dhrunil Bhatt (Chartered Accountant)     15 May 2019

Dhrunil Bhatt
Chartered Accountant 
 11 likes  227 points

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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

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Padmanathan Kv   15 May 2019

Padmanathan Kv

 114 likes  2122 points

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

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Pankaj Rawat (GST Practitioner)     15 May 2019

Pankaj Rawat
GST Practitioner 
 3502 likes  47427 points

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

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CA Shikha Sharma (Ceo)     16 May 2019

CA Shikha Sharma
Ceo 
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yes by company a

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A Kalita (Sr. Manager)     16 May 2019

A Kalita
Sr. Manager 
 22 points

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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)

CA Aravind Penugonda (Chartered Accountant)     16 May 2019

CA Aravind Penugonda
Chartered Accountant 
 17 likes  306 points

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Company B shall issue a tax invoice on Company A charging C+S/IGST,as applicable.

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Dhrunil Bhatt (Chartered Accountant)     16 May 2019

Dhrunil Bhatt
Chartered Accountant 
 11 likes  227 points

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Thank you all for your kind reply ....

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CA Shikha Sharma (Ceo)     16 May 2019

CA Shikha Sharma
Ceo 
 583 likes  3854 points

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Company B shall issue a tax invoice on Company A charging C+S/IGST,as applicable.

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