FAQs on goods sent for exhibition, Job work etc
Q-1. What will be the treatment for goods sent for the exhibition?
Ans: Where the goods are sent for display at an exhibition (including entailing inter-state movement) the same would not constitute ‘supply’ under the GST regime as the same are not supplies made for a consideration. In the context of such movements.
a.The consigner may issue a delivery challan in lieu of an invoice at the time of removal of goods for transportation
b. Since such movement is only under a delivery challan no liability arises as there is no
invoice or payment
As regards the return movement, whereas the GST framework does not prescribe any mechanism, the goods may be moved under the same delivery challan. To that extent, the delivery challan should explicitly state that the goods covered thereunder are destined to come back post the exhibition.
However, for an exhibition-cum-sale event, the dealer may qualify as ‘casual taxable person’ as the dealer would undertake transactions involving the supply of goods. In such a case the dealer would be required to obtain a temporary registration in the State where the exhibition is held as well as pay an advance tax to the extent of his estimated tax liability.
Q-2: What will be the treatment where goods sent for display at an exhibition are supplied therefrom (after end of the exhibition) to another State?
Ans: If the goods are sent directly from the location where the exhibition is held to the customer in another State, the supplier needs to take registration as a casual taxable person and pay IGST in the State where the exhibition is held.
Q-3: What would be the GST implication where goods are carried by the representative of an entity to another State[s]?
Ans: Where the customer is known, the goods may be moved on sale on approval basis to such customer, under a delivery challan. As and when the customer approves the goods, an invoice may be issued charging IGST.
However, where the customer is not pre-identified or where the goods are to be shown to various persons in one or more States, the supplier will need to obtain registration as a casual taxable person in the respective State[s].
The registration must be obtained at least 5 days prior to making any sales and will be for a limited period of time. The supplier has to pay an advance deposit of the estimated GST amount at the time of taking registration, which can be adjusted for paying the GST on sales. If any balance amount of deposit is left, the same will be refunded.
Alternatively, the goods may be moved under delivery challan as ‘samples for display purposes only’ and then brought back to the origin State. Interested customer may be requested to place orders subsequently, based on which orders a separate inter-state supply, charging IGST, may be made.
Q-4: At the time of selling jewelry, can we mention break-up of commodity price and making charges separately, in terms of the practice followed prior to GST?
Ans: Since the supplier is making the sale of finished jewelry, the invoice should mention only the value of jewelry sold along with its HSN. However, if, in terms of trade practice, it is necessary to provide a price break-up, the same may be provided on the invoice or as an enclosure thereto.
Q-5: What would be the treatment of packing costs and freight charges recovered from the customer?
Ans: As per Section 15 of CGST Act, 2017, the value of supply of goods shall include all incidental expenses and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services. Accordingly, the said charges recovered from the customer shall be
included in the transaction value. Further, the supply would be a composite supply, where the principal supply would be the supply of goods and GST shall be charged on total value at the rate applicable on the principal supply. If charged separately (i.e. over and above the principal supply of goods), the said charges are to be mentioned in the Invoice.
Q-6: Would any GST implication arise on irrecoverable processing loss in course of job work?
Ans: In terms of Section 143(5) ‘any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered’ However, the aforesaid provision does not cover process loss/ manufacturing loss which is not recoverable. Ideally, to establish that such loss is within an acceptable range, it should be
within the limits as recognized in trade. In terms of Foreign Trade Policy 2015-2020 issued by the DGFT, specific wastage norms are prescribed for the jewelry sector ranging from 0.20% to 5% (depending upon the nature of the product).
Q-7 When would a principal be required to pay GST on a reverse charge basis in respect of job work services? What are the compliance requirements when job work services are obtained from unregistered job workers?
Ans: As per Sec 9(4) of the CGST Act, 2017, where supplies are received by a registered person from an unregistered person, GST shall be paid by such registered person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Therefore if you are availing any service from a job worker who is unregistered, you will be liable to pay GST on the reverse charge basis. Where the job worker remains unregistered even though his turnover is beyond the taxable threshold, the principal would continue to be liable under reverse charge till such job worker obtains a registration. Separate proceedings may be initiated against the job-worker for having not obtained registration and due paid taxes.
In such cases, the recipient is required to issue the following documents
(a) A self- invoice in respect of services received from the job-worker
(b) A payment voucher at the time of making payment to the job-worker
Q-8. Can goods be sent to own branch of the same entity (in another State) on sale on approval basis?
Ans: In terms of Section 25(4) of the CGST Act, 2017, units of the same person in different states shall be considered as ‘distinct persons for the purposes of this Act’. As per Section 12 of the CGST Act, 2017 read with Section 31(7) thereof, where the goods are sent on sale on approval basis, the time of supply would trigger only when such supply is made or six months from the date of removal, whichever is earlier. Accordingly, it may be possible to send such goods on sale on approval basis to own branch of the same entity (in another State), which branch would be considered to be a distinct person.
However, considering that commercially, there cannot be such a transaction between own units of the same entity, coupled with the fact that, in terms item 2 of Schedule I to the said Act, supply of goods between distinct persons are taxable, even though made without any consideration, it may be prudent to treat such transactions as stock transfers and charge IGST on the same.
Q-9: Are there any uniform e-way bill requirements under GST for each state?
Ans: In terms of the E-Way Bill Rules, each State Government has been empowered to specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage. Accordingly, requirements, as prescribed in the individual States, has to be seen.
Q-10: What would be the treatment in the case where the alloy is mixed by job worker in jewelry?
Under GST, the aforesaid supply should be considered as composite supply, wherein, the supply of services would be the principal supply. Accordingly, on the entire value (including value of alloy), GST would be charged at the rate of 5%
Q-11.Whether advances received against supply of goods would attract GST?
Ans: Yes, the advance will be liable to GST at the time when it is received from the customer.
However, where supply is made against such advances in the same tax period, the time of supply would be determined based on the date of invoice. Thus, GST shall be payable on advances only to the extent supply against the same have not been made during a tax period.
Q-12: How can input tax credit of CGST and SGST charged by a hotel be claimed in case the recipient is not registered in that State?
Ans: Input tax credit can only be claimed if the recipient is registered in that State. In case the recipient qualifies as a casual taxable person, he can obtain registration and claim such input tax credit. Alternatively, the recipient may obtain an ISD registration in such State to claim and distribute such input tax credit. However, where the aforesaid scenarios are not workable, the recipient may consider making the bookings through an agent, in which case the recipient would be charged IGST by such agent.
Q-13: What would the GST rate for intermediaries/ aggregators, who themselves do not undertake any treatment or process on inputs?
For qualifying as job worker, the intermediary/ aggregator would be required to carry some treatment or process. Absent the same, GST would apply at the rate of 18%.
However, it may be argued that qua the principle who sends the goods to the intermediary/ aggregator, in substance, the latter would be commercially perceived as a job-worker, and hence GST at the rate of 5% should be applicable, though such view may be litigious.
Q-14.What documentation has to be followed for sending jewelry for hallmarking?
Ans: The jewelry should be moved under a delivery challan.
Q-16: What will be the treatment for hallmarking charges recovered from Customer?
Ans: As per Section 15 of the CGST Act, 2017, the value of supply of goods shall include all incidental expenses and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services. Accordingly, hallmarking charges recovered from the customer shall be included in the transaction value. Further, the supply would be a composite supply, where
the principal supply would be the supply of jewelry. Accordingly, GST shall be charged on total value at the rate applicable on the principal supply (i.e. supply of jewelry). If charged separately (i.e. over and above the principal supply of goods), the hallmarking charges are to be mentioned in the Invoice
Permalink