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RPT AND ITC ISSUE

Jayanta Bandyopadhyay (376 Points)

18 February 2025

Our public ltd co sells all manufactured Product from Assam Factory and Bengal Warehouse to Bengal based LLP, all within the same family Director takes partner hat.

GST dept raises queries wrt ITC,output tax ,waybill . How to convince them

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8545 Points)
Replied 18 February 2025

A complex scenario involving related-party transactions and GST compliance! To address the GST department's queries, you'll need to provide clear explanations and documentation to demonstrate compliance with GST regulations. Here's a suggested approach: ITC (Input Tax Credit) 1. *Maintain proper documentation*: Ensure that all invoices, debit notes, and credit notes related to the transactions between the public limited company (PLC) and the LLP are properly maintained. 2. *Demonstrate legitimate business transactions*: Provide evidence that the transactions between the PLC and the LLP are genuine business transactions, such as: - Business agreements or contracts. - Minutes of meetings or board resolutions. - Correspondence or emails. 3. *Show ITC eligibility*: Confirm that the ITC claimed by the LLP is eligible as per GST rules, considering factors like: - The goods or services are used for business purposes. - The invoices are properly issued and maintained. - The ITC is claimed within the stipulated time frame. Output Tax 1. *Verify output tax calculations*: Re-check the output tax calculations to ensure accuracy and compliance with GST regulations. 2. *Provide sales invoices and ledgers*: Submit sales invoices and ledgers to demonstrate that the output tax has been correctly calculated and paid. 3. *Explain any discrepancies*: If there are any discrepancies, provide explanations and supporting documentation to justify the output tax calculations. Waybill (E-Way Bill) 1. *Verify e-way bill generation*: Confirm that e-way bills were generated for all applicable transactions, as per GST rules. 2. *Provide e-way bill records*: Submit records of e-way bills generated, including the e-way bill numbers, dates, and details of goods transported. 3. *Explain any non-compliance*: If there were instances of non-compliance, provide explanations and supporting documentation to justify the reasons. Related-Party Transactions 1. *Demonstrate arm's length transactions*: Provide evidence that the transactions between the PLC and the LLP were conducted at arm's length, without any influence from the family relationship. 2. *Submit transfer pricing documentation*: If applicable, submit transfer pricing documentation to demonstrate that the transactions were conducted at fair market value. Response to GST Department's Queries 1. *Provide detailed explanations*: Respond to each query with detailed explanations, supported by relevant documentation. 2. *Submit supporting documents*: Attach all relevant supporting documents, such as invoices, ledgers, e-way bills, and transfer pricing documentation. 3. *Seek professional assistance*: If needed, consult a GST expert or chartered accountant to ensure accurate and compliant responses. By providing clear explanations, supporting documentation, and demonstrating compliance with GST regulations, you should be able to address the GST department's queries and resolve the matter.

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