Category: GST

GSTR 9C is the annual reconciliation statement under GST that provide the opportunity to the registered persons to reconcile their annual data filed as per the returns and the data as per their audited balance sheets. This is very crucial since to ensure congruence in the returns filed and the actual figures as per the audited financial statements. Any discrepancy, omissions, errors, mismatches may be resolved through the GSTR 9 and 9C annual return forms.

This annual exercise must be undertaken with great caution since it narrows down the possibility of any future notices or scrutiny for the taxpayer. With the due date for GSTR 9C form for FY 2024-25 fast approaching, let us understand how to compile the returns accurately –

GSTR 9C Applicability for FY 2024-25

GSTR 9C is an annual reconciliation statement that must be filed along with Form GSTR 9 primarily to reconcile the data in the audited balance sheet and the GST returns to ensure congruence in the data reported in the audited financials and the GST returns. Form GSTR 9C must be mandatorily filed by all registered persons having an aggregate turnover of more than Rs. 5 crores in FY 2024-25. This statement was earlier audited by a Chartered Accountant however, now this is self-certified by the taxpayer only.

Certain categories of registered persons have been exempted from filing the GSTR 9 and 9C annual return –

• Persons paying TDS u/s 51 of the CGST Act,
• Persons paying TCS u/s 52 of the CGST Act,
• Taxpayers under composition scheme,
• Casual Taxable Persons,
• Input Service Distributors,
• Non-resident Taxable Persons.

Difference between GSTR 9 and 9C

GSTR 9 and 9C are both annual return forms under GST however the key differences between them are as under –

GSTR 9 Form	GSTR 9C Form
GSTR 9 form is applicable mandatorily for all registered persons (except as mentioned above), having an aggregate turnover of over Rs. 2 crores in FY 2024-25.	Form GSTR 9C must be mandatorily filed by all registered persons having an aggregate turnover of more than Rs. 5 crores in FY 2024-25.
GSTR 9 form consolidates the data from the monthly GST returns filed by the taxpayer.	GSTR 9C is an annual reconciliation statement that must be filed along with Form GSTR 9 primarily to reconcile the data in the audited balance sheet and the GST returns to ensure congruence in the data reported in the audited financials and the GST returns.

Changes in GSTR 9C for FY 2024-25

The following changes have been incorporated in the GSTR 9C annual reconciliation statement from FY 2024-25 onwards –

• Reconciliation of turnover

As per GSTR 9C for FY 24-25, in the table for reconciliation of turnover declared in the audited financial statements and the turnover as per GSTR 9 form will now include a clause reporting the supplies on which tax is to be paid by the e-commerce operators u/s 9(5) to be reported by the supplier. This will be adjusted for computation of taxable turnover as per books of accounts and GSTR 9.

• Reconciliation of rate wise tax liability and amount payable thereon

As per GSTR 9C for FY 24-25, in the table for reconciliation of rate wise tax liability and amount payable thereon, a new clause has been inserted where e-commerce operators have to report the taxes on the supplies made by them on which tax has to be paid u/s 9(5).

• Reconciliation of taxes paid – Additional amount payable but not paid

As per GSTR 9C for FY 24-25, in the table for reconciliation of taxes paid – Additional amount payable but not paid, a new clause has been inserted where e-commerce operators have to report the taxes on the supplies made by them on which tax has to be paid u/s 9(5).

How to file GSTR 9C?

While filing GSTR 9C form, the taxpayer needs to focus on the following –

• Reconciliation of Gross Turnover

The taxpayer has to report the gross turnover as per the audited financials. This aggregate turnover must tally with the turnover reported as per GSTR 9 taking into account adjustments for credit notes, advances etc.

Any unreconciled component of the turnover will be deduced if the turnover as per GSTR 9 does not tally with the turnover as per the audited financial statements.

• Reasons for unreconciled turnover

If the unreconciled turnover as per the previous table is not nil, the taxpayer must mention the reasons for difference in the turnover as per GSTR 9 and audited financial statements.

• Reconciliation of Taxable Turnover

The taxpayer has to mention the annual turnover as per the audited financials and then adjust it for exempted supplies, zero rated supplies, inward supplies subject to RCM and thereby arrive at the taxable turnover as per the audited financials. This taxable turnover must tally with the taxable turnover as per the GSTR 9 for the financial year.

Any unreconciled component of the taxable turnover will be deduced if the taxable turnover as per GSTR 9 does not tally with the taxable turnover as per the audited financial statements.

• Reasons for unreconciled taxable turnover

If the unreconciled taxable turnover as per the previous table is not nil, the taxpayer must mention the reasons for difference in the taxable turnover as per GSTR 9 and audited financial statements.

• Reconciliation of taxes paid

As per the taxable turnover reported in the previous tables, the tax payable has to be mentioned in this table under CGST, SGST, IGST and cess on this taxabke turnover. The tax payable will now be compared with the tax payable as per GSTR 9 form.

Any unreconciled component of the tax payable will be deduced if the figures are not in congruence.

• Reasons for unreconciled payment of tax

If the unreconciled payment of tax as per the previous table is not nil, the taxpayer must mention the reasons for such difference.

• Reconciliation of taxes paid

This table pertains to the additional amount of tax payable but not paid due to the reasons specified in the table above.

• Reconciliation of ITC

The taxpayer has to reconcile ITC declared in the GSTR 9 annual return form with the ITC availed on expenses as per the audited financial statements.

• Reasons for unreconciled ITC

If the unreconciled ITC as per the previous table is not nil, the taxpayer must mention the reasons for such difference.

• Tax payable on unreconciled ITC
• Additional liability due to non-reconciliation.

GSTR 9C Penalty

If a taxpayer fails to file GSTR-9C by the due date i.e. 31st December of the year following the relevant financial year, there is no dedicated penalty under the law for this specific delay. However, the taxpayer may face a general penalty of Rs. 25,000.

FAQs on  GSTR 9C

Q1. Can GSTR 9C be filed without filing GSTR 1 and 3B?

A1. No, GSTR 9 and 9C for FY 2024-25 can only be filed after all the monthly GSTR 1 and GSTR 3B forms have been filed.

Q2. Can GSTR 9C be revised after it has been filed?

A2. No, GSTR 9C cannot be revised after it has been filed.

About the Author This article is written by FCA Eshita Krishna , an experienced Chartered Accountant with advanced ICAI certifications in DISA, Anti-Money Laundering, Real Estate Laws, and Forex & Treasury Management. With strong expertise in direct and indirect tax, audit, risk advisory, financial planning, and financial management, she delivers accurate, experience-backed financial insights to readers.  

GSTR 9 form is the annual return form under GST that provide the opportunity to the registered persons to reconcile their annual data filed as per the monthly returns and furnish their reconciled annual data. Any discrepancy, omissions, errors, mismatches in the monthly GST returns may be resolved through the GSTR 9 form. With the due date for the GSTR 9 form for FY 2024-25 fast approaching, let us understand how to file GSTR 9 accurately –

GSTR 9 Applicability for FY 2024-25

The annual return in Form GSTR 9 must be mandatorily filed by all registered persons filing GSTR 1 and 3B regularly, having an aggregate turnover of more than Rs. 2 crores in FY 2024-25. However, certain categories of registered persons have been exempted from filing the GSTR 9 annual return –

• Persons paying TDS u/s 51 of the CGST Act,
• Persons paying TCS u/s 52 of the CGST Act,
• Taxpayers under composition scheme,
• Casual Taxable Persons,
• Input Service Distributors,
• Non-resident Taxable Persons.

GSTR 9C Applicability for FY 2024-25

GSTR 9C is an annual reconciliation statement that must be filed along with Form GSTR 9 primarily to reconcile the data in the audited balance sheet and the GST returns to ensure congruence in the data reported in the audited financials and the GST returns. Form GSTR 9C must be mandatorily filed by all registered persons having an aggregate turnover of more than Rs. 5 crores in FY 2024-25. This statement was earlier audited by a Chartered Accountant however, now this is self-certified by the taxpayer only.

Difference between GSTR 9 and 9C

GSTR 9 and 9C are both annual return forms under GST however the key differences between them are as under –

GSTR 9 Form	GSTR 9C Form
GSTR 9 form is applicable mandatorily for all registered persons (except as mentioned above), having an aggregate turnover of over Rs. 2 crores in FY 2024-25.	Form GSTR 9C must be mandatorily filed by all registered persons having an aggregate turnover of more than Rs. 5 crores in FY 2024-25.
GSTR 9 form consolidates the data from the monthly GST returns filed by the taxpayer.	GSTR 9C is an annual reconciliation statement that must be filed along with Form GSTR 9 primarily to reconcile the data in the audited balance sheet and the GST returns to ensure congruence in the data reported in the audited financials and the GST returns.

GSTR 9 Due Date

The due date for filing GSTR 9 form for FY 2024-25 is 31^st December, 2025.

GSTR 9 Late Fees

Turnover	Late Fees	Maximum Late Fees
< Rs.5 crores	Rs.50 per day	0.04% of turnover in state/UT (0.02% each under CGST and SGST Act)
Rs.5 crore – Rs.20 crore	Rs.100 per day	0.04% of turnover in state/UT (0.02% each under CGST and SGST Act)
> Rs.20 crore	Rs.200 per day	0.50% of turnover in state/UT (0.25% each under CGST and SGST Act)

How to file GSTR 9 form?

While filing GSTR 9 form, the taxpayer needs to focus on the following –

Table 4 Details of outward supplies, inward supplies on which tax is payable	This will be auto-populated in the GSTR 9 form from the monthly returns and the taxpayer must confirm these figures. This table shows the aggregate of all supplies on which any tax – CGST, SGST, IGST or cess is payable by the taxpayer.
Table 5 Details of outward supplies on which tax is not payable	The zero-rated, exempted, nil rated supplies i.e. supplies on which no tax is payable will be auto-populated from the monthly returns and the taxpayer must confirm these figures.
Table 6 Details of ITC availed during the financial year	The aggregate value of ITC availed in the monthly returns will be auto-populated and the taxpayer must confirm these figures.
Table 7 Details of ITC reversed and ineligible ITC for the financial year	The aggregate value of ITC reversed and ineligible ITC reversed in the monthly returns will be auto-populated and the taxpayer must confirm these figures.
Table 8 Other ITC related information	This table shows the ITC as per GSTR 2B and at the end shows the ITC that will be lapsed in the current financial year.
Table 9 Details of tax paid as declared in returns filed during the financial year	The aggregate value of the tax payable and the total tax paid in cash and paid through ITC will be mentioned in this table.
Table 10,11, 12 and 13 Particulars of transactions for the financial year declared in returns of the next financial year till the specified period	This table highlights the impact of debit notes and credit notes and mentions the – ITC of the financial year reversed in the next financial year, and ITC of the financial year availed in the next financial year.
Table 14 Differential tax paid on account of table 10 and 11	This table shows the differential tax payable and paid on account of table 10 and 11 entries.
Table 15 Particulars of demands and refunds	The details of all demands and refunds have to be entered in this table by the taxpayer.
Table 16 Supplies received from composition taxpayers, deemed supply by job worker and goods sent on approval basis	The table contains details of the supplies received from composition taxpayers, deemed supply by job worker and goods sent on approval basis and the tax liability on the supplies.
Table 17 HSN wise summary of the outward supplies	The summary of the aggregate HSN wise summary of goods and services components of the outward supplies will be auto-populated in this table.
Table 18 HSN wise summary of inward supplies	The summary of the aggregate HSN wise summary of goods and services components of the inward supplies will be auto-populated in this table.
Table 19 Late fees payable and paid	The late fees payable and paid will be fetched if the GSTR 9 is filed after the due date i.e. after 31st December, 2025.

FAQs on  GSTR 9 Form

Q1. Can GSTR 9 from be filed without filing GSTR 1 and 3B?

A1. No, GSTR 9 for FY 2024-25 can only be filed after all the monthly GSTR 1 and GSTR 3B forms have been filed.

Q2. Can GSTR 9 form be revised after it has been filed?

A2. No, GSTR 9 form cannot be revised after it has been filed.

About the Author This article is written by FCA Eshita Krishna , an experienced Chartered Accountant with advanced ICAI certifications in DISA, Anti-Money Laundering, Real Estate Laws, and Forex & Treasury Management. With strong expertise in direct and indirect tax, audit, risk advisory, financial planning, and financial management, she delivers accurate, experience-backed financial insights to readers.  

The Ministry of Finance has announced a GST amnesty scheme u/s 128A with effect from 01.11.2024 based on the recommendations made by the GST council in its 53^rd meeting for waiver of interest or penalty or both for demands u/s 73 for FY 2017-18 to FY 2019-20. The procedure and eligibility for the GST amnesty scheme for such waiver has been explained comprehensively in the circular issued on 15^th October, 2024 (Circular No. 238/32/2024-GST) and by insertion of Rule 164 in the CGST Rules, 2017. Let us understand the eligibility, procedure, forms and timelines pertaining to availing the benefits under this GST amnesty Scheme.

Section 128A and GST forms

Section 128A has an overriding effect on all the other provisions of the GST law. Section 128A provides waiver of interest or penalty or both for demands u/s 73 other than on account of erroneous refund only and for the time period of FY 2017-18 to FY 2019-20 in the following cases :-

Where a notice has been issued u/s 73(1) or a statement has been issued u/s 73(3), but no order has been issued u/s 73(9)	Application in FORM GST SPL – 01
Where an order has been issued u/s 73(9) but no order has been issued by the Appellate Authority/Revisional Authority u/s 107(11) or 108(1)	Application in FORM GST SPL – 02
Where an order has been issued by the Appellate Authority/Revisional Authority u/s 107(11) or 108(1) but no order has been passed by the Appellate Tribunal u/s 113(1)	Application in FORM GST SPL – 02
Where a notice that was initially issued u/s 74 for FY 2017-18, 2018-19, and 2019-20 and an order is passed or required to be passed u/s 73 as per the directions to the proper officer by the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of Section 75(2)	Application in FORM GST SPL – 02

In case of multiple notices issued to the taxpayer, they will have to file a separate application in Form GST SPL -01 or Form GST SPL – 02 in respect of each notice/statement/order.

GST Amnesty Scheme – Timelines

As per Notification No. 21/2024 – Central Tax dated 8^th October, 2024, 31.03.2025 has been notified as the date on or before which the full payment of the tax as per the notice or order needs to be made by the taxpayer for availing the benefits of such waiver of interest or penalty or both.

Withdrawal of appeals before availing this scheme

Before filing an application in Form GST SPL -01 or Form GST SPL – 02, the taxpayer is required to withdraw any appeal u/s 107 or 112, or any writ petitions against the notice/statement/order relating to the issues for which the taxpayer is applying u/s 128A. The taxpayer will have to submit a copy of the order of the withdrawal along with the application filed under Form GST SPL -01 or Form GST SPL – 02.

If the application for such withdrawal is still pending with the authorities, the taxpayer can file a copy of such application for withdrawal alongwith Form GST SPL -01 or Form GST SPL – 02. However, the taxpayer will have to upload the order for withdrawal within 1 month from the date of its issuance.

Payment of Tax

Case I – Where a notice has been issued u/s 73(1) or a statement has been issued u/s 73(3), but no order has been issued u/s 73(9) and the taxpayer wishes to avail the benefit of this GST amnesty scheme

Payment of Tax – The payment of tax demanded shall be made through Form GST DRC – 03.

Case II – Where an order has been issued by the Appellate Authority/Revisional Authority u/s 107(11) or 108(1) but no order has been passed by the Appellate Tribunal u/s 113(1) OR where an order has been issued by the Appellate Authority/Revisional Authority u/s 107(11) or 108(1) but no order has been passed by the Appellate Tribunal u/s 113(1) and the taxpayer wishes to avail the benefit of this GST amnesty scheme

Payment of Tax – The payment of tax demanded shall be made only by making the payment against the debit entry created in the Part II of the Electronic Liability Register (ELR) by the demand order. However, if the taxpayer has already made the payment of such tax via Form GST DRC – 03, he shall be required to file Form GST DRC – 03A for adjustment of the demand created in the ELR Part – II before filing any application u/s 128A.

In both these cases, the full payment of the tax as per the notice or order needs to be made by the taxpayer on or before 31.03.2025 for availing the benefits of such waiver of interest or penalty or both. Even of such amount of paid before Section 128A came into effect, it shall be considered if it was intended to be paid towards the said demand.

Acceptance of application

The proper officer shall issue an order under Form GST SPL – 05 accepting the application for such waiver. Where no order of acceptance is passed by the officer within the time limit as Rule 164(13) of the date of filing such application, the application shall be deemed to be approved and subsequently Form GST SPL – 05 shall be made available on the portal.

Rejection of application

If on examination of the Form GST SPL -01 or Form GST SPL – 02, the proper officer finds that the application is liable to be rejected, he shall issue a notice within 3 months from the date of such application to the taxpayer in Form GST SPL – 03 alongwith an opportunity of being heard.

The taxpayer can then file his reply in Form GST SPL – 04 on the portal within 1 month from the date of receipt of such rejection notice.

However, if on receipt of reply in Form GST SPL – 04, the proper officer is of the view that the applicant is not eligible for such waiver, he shall issue an order under Form GST SPL – 07 rejecting the application.

Appeals against orders issued under Rule 164

1. Appeals cannot be filed u/s 107 for orders issued in Form GST SPL – 05 concluding the proceedings u/s 128A.
2. Appeal can be filed u/ 107(1) against orders of rejection filed in Form GST SPL – 07 by filing an application in Form GST APL – 01.
3. Since the tax amount would have already been deposited while filing an application under Form GST SPL -01 or Form GST SPL – 02, there is no requirement of any pre-deposit. However, where the tax paid is less than the pre-deposit requirement, the differential will have to be deposited.
4. On filing of an appeal against Form GST SPL – 07, where the appellate authority has holds that it was wrongly rejected and that the benefit of the waiver must be given to the taxpayer, an order in Form GST SPL – 06 will be passed. No appeal shall be allowed against an order in Form GST SPL – 06.
5. It is pertinent to understand that the appeal will be regarding the applicability of the waiver of interest or penalty or both and not on the merits of the original notice/statement/order.

Conditions where original appeals will be restored

The pre-requisite for availing the benefit of the waiver of interest or penalty or both, taxpayer will have to withdraw his appeals against such orders as mentioned in detail above. However, in the following 2 circumstances the original appeal filed by the taxpayer will be restored:-

• Where an application under Form GST SPL -01 or Form GST SPL – 02 has been rejected by the appellate authority in Form GST APL -04, the original appeal filed by the taxpayer will be restored if he files an undertaking in Form GST APL – 08 that he is not filing any appeal against the order of the appellate authority.
• Where the taxpayer has not filed an appeal as per the time limit of Section 107(1) against the rejection order, the original appeal filed by the taxpayer will be restored.

To know more about the GST Amnesty Scheme of 2023, click here.

Background – Advertisements related services

Transaction – Section 12(14) pertains to the determination of place of supply of advertisements related service to the Central Government/State Government/Statutory body/Local authority meant for the State or Union territory identified in contract or agreement.

Place of supply of service – Each of such States/Union territories where the advertisement is broadcasted/run/played/dissemination.

The value of such supplies is in proportion to the services provided by way of dissemination in the respective State/Union territories determined in terms of the contract or agreement entered into in this regard. However, in absence of a contract or agreement between the supplier and recipient of services, the proportionate value of advertisement services attributable to different States/Union territories will be computed in accordance with Rule 3 of the IGST Rules, 2017.

GST Implications

The provisions of Rule 3 of the IGST Rules, 2017 along with examples are as under:-

Type of Advertisements	Factor which determines the proportionate value of service attributable to the dissemination in each State/Union Territory
Advertisements in newspapers and publications	Amount payable for publishing an advertisement in all the editions of a newspaper or publication, which are published in each State/Union territory.
Example – M/s ABC Printers has received an order from a Government agency for advertisement of “No pollution” campaign for editions in Delhi, Mumbai and Noida. In this case, invoices will be issued separately depending on the number of editions in each separate State or Union Territory.
Advertisement through printed material like pamphlets, leaflets, diaries, calendars, T-shirts, etc.	Amount payable for the distribution of a  specific number of such material in each State/Union territory.
Example – M/s ABC Printers has received an order from a Government agency for printed t-shirts with respect to the “No pollution” campaign in Delhi, Mumbai and Noida. In this case, invoices will be issued separately depending on the number of t-shirts distributed in each separate State or Union Territory.
(a) Advertisements in hoardings (other than those on trains)	Amount payable for the hoardings located in each State/Union territory.
(b) Advertisements in hoardings on trains	Length of the railway track in each state or UT.
Examples – M/s ABC Printers has received an order from a Government agency for advertisement of “No pollution” campaign for hoardings displayed in Delhi, Mumbai and Noida. In this case, invoices will be issued separately depending on the number of hoardings displayed in each separate State or Union Territory.M/s ABC Printers has received an order from a Government agency for advertisement of “No pollution” campaign for hoarding to be displayed on the Bharat express in Delhi and Mumbai. The train runs through Delhi, Rajasthan and Maharashtra. In this case, invoices will be issued separately according to ratio of the length of the railway track in each state or UT i.e. 3 invoices according to ratio of the length of the railway track in Delhi, Rajasthan and Maharashtra.
Advertisements on the back of utility bills of oil and gas companies, etc.	Amount payable for the advertisements on bills pertaining to consumers having billing addresses in each State/Union Territory.
Example – Example – M/s ABC Printers has received an order from a Government agency for advertisement on the electricity bills of consumers in Delhi and Mumbai with respect to the “No pollution” campaign. In this case, invoices will be issued separately depending on the number of consumers in Delhi and Mumbai.
Advertisements on railway tickets	Number of railway stations in each State/Union territory.
Example – M/s ABC Printers has received an order from a Government agency for advertisement on railway tickets of “No pollution” campaign for the Bharat express. The train runs through Delhi, Rajasthan and Maharashtra. In this case, invoices will be issued separately according the number of railway stations in each State/Union territory.
Advertisements on radio stations	Amount payable to such radio station, which by virtue of its name is part of each State/Union territory.
Example – M/s ABC Printers has received an order from a Government agency for advertisement on radio of “No pollution” campaign for broadcasting in Delhi and Mumbai. In this case, invoices will be issued separately based on the amount pertaining to Delhi and Mumbai.
Advertisement on television channels	Number of viewers of such channel in each State/Union territory. Viewership can be ascertained from the channel viewership figures published by the Broadcast Audience Research Council. Figures for the last week of a given quarter will be used for calculating viewership for the succeeding quarter. Where the channel viewership figures relate to a region comprising of more than one State/Union territory, the viewership figures for a State/Union territory of that region, will be calculated in the ratio of the populations of that State/Union territory, as determined in the latest census.
Example – M/s ABC Printers has received an order from a Government agency for advertisement on television channel India News regarding the “No pollution” campaign for telecasting in Delhi and Mumbai. In this case, invoices will be issued separately based on the number of viewers in Delhi and Mumbai.
Advertisements in cinema halls	Amount payable to a cinema hall or screens in a multiplex in each State/Union territory.
Example – Example – M/s ABC Printers has received an order from a Government agency for advertisement in cinema halls regarding the “No pollution” campaign for audience in Delhi and Mumbai. In this case, invoices will be issued separately based on the number of screens in Delhi and Mumbai.
Advertisements on internet – The service will have to be deemed to have been provided all over India	Number of internet subscribers in each State/Union territory. Internet subscribers can be ascertained from the internet subscriber figures published by the Telecom Regulatory Authority of India (TRAI). Figures of the last quarter of a given financial year will be used for calculating the number of internet subscribers for the succeeding financial year. Where the internet subscriber figures relate to a region comprising of more than one State/Union territory, the subscriber figures for a State/Union territory of that region shall be calculated in the ratio of the population of that State/Union territory, as determined in the latest census.
Advertisements through SMS	Number of telecom subscribers in each State/Union territory. Telecom subscribers in a telecom circle can be ascertained from the telecom subscribers’ figures published by the TRAI. Figures of a given quarter will be used for calculating the subscribers for the succeeding quarter. Where such figures relate to a telecom circle comprising of more than one State/Union territory, the subscriber figures for that State/Union territory shall be calculated in the ratio of the population of that State/Union territory, as determined in the latest census.

E invoice has emerged as one of the path-breaking additions under the GST laws. The main point of concern of the lawmakers has been fake invoicing that result in tax evasion and frauds. With the introduction of the concept of e invoice, this has been standardized to reduce instances of such evasion by providing a comprehensive trail of all B2B invoices.

The GST Council, in its 37th meeting held on 20.09.2019, approved introduction of electronic invoice in GST in a phased manner. Accordingly, steps have been initiated to introduce ‘e-invoicing’ for reporting of Business to Business (B2B) and export invoices. E invoice means reporting details of specified GST documents to a Government-notified portal and obtaining a reference number.   It doesn’t mean generation of invoice by a Government portal.

What is an e invoice?

As per Rule 48(4) of the CGST Rules, 2017 certain registered individuals must generate invoices by uploading the required details in the specified format (FORM GST INV-01) on the Invoice Registration Portal (IRP) to obtain an Invoice Reference Number (IRN).

Once this ‘e-invoicing’ procedure is completed, the invoice, which includes the IRN and a QR code, is provided by the registered supplier to the buyer. This document is commonly referred to as an ‘e invoice’ under GST.

The standard schema for e-invoices (INV-01) enables seamless exchange of invoice data between the supplier and the buyer in a structured electronic format. It’s important to note that ‘e invoice’ does not imply that the invoice is generated by a government portal, but rather, that it is validated through the IRP.

E invoice applicability

As discussed above, the applicability has been introduced in a phased manner i.e. e invoice generation for all B2B and export invoices will be mandatory for a taxpayer with an annual aggregate turnover exceeding the limits as mentioned below in any financial year from FY 2017-18 onwards:-

Annual aggregate turnover in any financial year from FY 2017-18 onwards	Date of applicability
Rs. 500 crores	01.10.2020
Rs. 100 crores	01.01.2021
Rs. 50 crores	01.04.2021
Rs. 20 crores	01.04.2022
Rs. 10 crores	01.10.2022
Rs. 5 crores	01.08.2023

As per Notification No. 10/2023-Central Tax dated 10.05.2023, e invoicing will be applicable on the taxpayer w.e.f. 01.08.2023 if the annual aggregate turnover in any financial year from FY 2017-18 onwards exceeds Rs. 5 crores.

Entities exempted for generation of e invoice

The applicability of e invoice has been exempted on the following classes of registered persons:-

• Special Economic Zone units
• Insurance companies
• Banking companies/NBFC/Financial institutions
• Goods transport agency
• Passenger transport service providers
• Suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens
• OIDAR suppliers

Documents and supplies covered under the e invoice system

The documents presently covered under the e invoice system are invoices, debit notes and credit notes.

B2B supplies i.e. to registered persons, Supplies to SEZs (with/without payment), Exports (with/without payment), Deemed Exports, by notified class of taxpayers are currently covered under this system.

Procedure to generate e invoice

The steps involved in the generation of e invoices with respect to invoices, credit notes and debit notes are as under:-

• Generate tax invoice using the accounting software like Tally or any ERP
• Report such invoice to the Invoice Registration Portal (IRP)
• IRP generates a signed e invoice with a QR code and a unique Invoice Registration Number (IRN). IRN is a unique 64-character hash.
• Provide the buyer with the invoice along with the QR code.

GSTN had issued an advisory on 21.02.2024 on the enhanced e invoice portal.

Consequences of non-compliance

Failure to generate e-invoices as required by the GST law may result in penalties. As per Section 122 of the CGST Act, non-compliance can attract a fine of up to ₹10,000 per invoice or 100% of the tax due, whichever is higher. This can lead to significant financial penalties, particularly for businesses that deal with large volumes of invoices.

If a supplier fails to generate an e-invoice, the buyer may not be able to claim the Input Tax Credit (ITC) on that transaction. This is because the invoice won’t be reflected in the GST portal, leading to issues with matching invoices, a key aspect of availing ITC. This can result in financial losses and disrupt cash flow for both buyers and suppliers.

The generation of e-invoices is linked to the generation of e-way bills, which are required for the movement of goods. Without a valid e-invoice, businesses may face difficulties in creating e-way bills, leading to disruptions in logistics and the movement of goods. This can hinder business operations and lead to delays.

Non-generation of these could be viewed as a violation of the GST law, which may lead to additional scrutiny by tax authorities. Businesses that are non-compliant may face audits, investigations, or other legal actions, which can further increase operational risks and compliance burdens.

Advantages of e invoice system

The system stems from transparency and accuracy as its foundation and thus has the following benefits to name a few:-

• Eradication of fake invoicing and thus reducing fake ITC credits being availed by the taxpayers
• Automated updation of GSTR 1/2A and 2B and even eway bills
• Compliance has been made easy
• Better information available to tax authorities
• Reduction of disputes between the parties.

Difficulties associated with the e invoice system

E-invoicing under GST faces several challenges:

• SMEs may struggle with the required tech infrastructure.
• Implementing e-invoicing involves costs for software and employee training.
• Concerns about the safety of sensitive financial data uploaded to government portals.
• Slow response times and technical glitches with the IRP portal can disrupt transactions.
• Less organized businesses may find it hard to adapt to the digital process.

FAQs

Q1. Whether e-invoicing is applicable for invoices between two different GSTINs under same PAN?

A1. Yes, e-invoicing is applicable for invoices between two different GSTINs under same PAN.

Q2. How to check that IRP has registered the reported invoice?

A2. Upon successful registration of invoice on IRP, it will return a signed e-invoice JSON to the supplier with IRN and QR Code.

Q3. How to amend details of a reported invoice for which IRN has already been generated?

A3. Amendments are not possible on IRP. Any changes in the invoice details reported to IRP can be carried out on GST portal (while filing GSTR-1). In case GSTR-1 has already been filed, then using the mechanism of amendment as provided under GST. However, these changes will be flagged to proper officer for information.

Q4. Can an IRN/invoice reported to IRP be cancelled?

A4. Yes. The cancellation request can be triggered through ‘Cancel API’ within 24 hours from the time of reporting invoice to IRP. However, if the connected e-way bill is active or verified by officer during transit, cancellation of IRN will not be permitted. In case of cancellation of IRN, GSTR-1 also will be updated with such ‘cancelled’ status.

Time of supply means the date on which the charging event i.e. supply has occurred. It is the point at which the goods or services are considered supplied. Thus, time of supply helps in determining the due date for discharging the tax liabilities. The CGST Act, 2017 provides separate provisions for time of supply for goods and services in sections 12 and 13 respectively. In this section, we will be understanding the provisions for time of supply in case of goods.

Invoice provisions in respect of time of supply of goods – Section 31

Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. This section mandates issuance of invoice or a bill of supply for every supply of goods or services or both.

Time limit for issuance of invoice in case of supplier of goods –

A registered person supplying taxable goods shall issue invoice before or at the time of removal of goods for supply to the recipient where the supply involves movement of goods; or delivery of goods or making available thereof to the recipient, in any other case.

Issuance of invoice in case of continuous supply of goods –

Continuous supply of goods means a supply of goods which is provided on a recurrent basis, under a contract and for which the supplier invoices the recipient on a regular or periodic basis. In case of continuous supply of goods, where the successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.

Goods sent on sale on approval basis

Where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier.

Time of supply of goods under Forward charge – Section 12(2)

The time of supply of goods shall be the earliest of the following dates:-

• The date of issue of invoice by the supplier; or
• The last date on which he is required u/s 31 to issue the invoice with respect to the supply; or
• The date on which the supplier receives the payment with respect to the supply i.e. earlier of the date on which the payment is recorded in the books of account of the supplier or date on which the payment is credited to the supplier’s bank account.

However, an exception has been made in the law when the supplier receives an amount of Rs. 1,000/- in excess of the invoice amount, the time of supply for the extra amount shall be the date of issue of invoice at the option of the supplier.

Example –

Date of issue of invoice – 01.06.2023

Date of receipt of payment – 09.06.2023

Date when the supplier recorded the payment in the books of accounts – 10.06.2023

Thus, the time of supply will be 01.06.2023.

Time of supply of goods taxed under Reverse charge mechanism (RCM) – Section 12(3)

The time of supply of goods taxed under Reverse charge mechanism (RCM) shall be the earliest of the following:-

• The date of receipt of goods; or
• The date of payment as entered in the books of accounts of the recipient; or
• The date on which the payment is debited in his bank account; or
• The date immediately following 30 days from the date of issue of invoice or any other document, in lieu thereof by the supplier.

However, if the time of supply of goods cannot be ascertained as above, then the date of entry in the books of accounts of the recipient will be considered as the time of supply.

Example –

Date of receipt of goods – 01.06.2023

Date of payment as per the books of accounts of the recipient – 05.06.2023

Date on which payment was debited from the bank – 04.06.2023

Date of invoice – 02.06.2023

Thus, the time of supply will be 01.06.2023.

Time of supply of goods in case of supply of vouchers – Section 12(4)

Where the supply is identifiable at that point, the time of supply will be the date of issue of voucher. Where the supply is not identifiable, the time of supply will be the date of redemption of voucher.

Time of supply of goods in residuary cases – Section 12(5)

If it is not possible to determine the time of supply as per the above provisions, the time of supply shall be determined as follows:-

• In case where a periodical return has to be filed, the date on which such return is to be filed; or
• In any other case, be the date on which the tax is paid.

Time of supply for special charges like interest, late fees etc. – Section 12(6)

In case of addition in value by way of special charges like interest, late fees, etc. for delayed payment of consideration of goods, the time of supply is the date of receipt of the additional value.

Landmark ruling for time of supply of goods – HP India Sales Private Limited [2018 (10) TMI 1515 – Authority for advance Ruling – Maharashtra]

In this case, the goods delivered by the applicant to the customer through reseller remain the property of the applicant and passed on to the customer through reseller only upon invoicing and receiving the payment. The supplies are made on continuous basis in accordance with the terms and conditions of the contract entered. The applicant is required to raise invoice on periodic basis. Therefore, the supply of goods in this case fulfills the basic tenets of ‘continuous supply’ of goods.

Thus, the Authority for Advance Ruling ruled that the time of supply in the present case will be the earliest date between the date of invoice and date of payments with respect to the impugned supply u/s 12(2).

Landmark ruling for time of supply of goods from principal to agent – M/s Tata Coffee Limited [2019 (10) TMI 943 – Authority for Advance Ruling, Karnataka]

The Advance Ruling Authority ruled that the time of supply in respect of supply from principal to agent is determined u/s 12(2) read with Section 31(1). The time of supply in such case shall be the time of removal from the principal’s premises to the agent’s premises. The time of second supply by agent to the ultimate customer will not have any effect on the value or time of supply of first supply.

Determination of time of supply in case of change in rate of tax – Section 14

Where there is a change in rate of tax in respect of goods or services or both, the time of supply shall be determined in the following manner:-

Where the goods or services have been supplied BEFORE the change in rate of tax

Condition	Time of Supply	Applicable Rate
Where the invoice for the same has been issued and the payment is also received after the change in rate of tax	Date of receipt of payment or date of issue of invoice, whichever is earlier.	New Rate
Where the invoice has been issued prior to the change on rate of tax but payment is received after the change in rate of tax	Date of issue of invoice	Old Rate
Where the payment has been received before the change in the rate of tax, but the invoice for the same is issued after the change in rate of tax	Date of receipt of payment	Old Rate

Where the goods or services have been supplied AFTER the change in rate of tax

Condition	Time of Supply	Applicable Rate
Where the invoice has been issued prior to the change on rate of tax but payment is received after the change in rate of tax	Date of receipt of payment	New Rate
Where the invoice for the same has been issued and the payment is also received before the change in rate of tax	Date of receipt of payment or date of issue of invoice, whichever is earlier.	Old Rate
Where the payment has been received before the change in the rate of tax, but the invoice for the same is issued after the change in rate of tax	Date of issue of invoice	New Rate

Example – Rate has increased from 12% to 18% w.e.f. 01.06.2023.

Date of supply	Date of invoice	Date of payment	Time of supply
28.05.2023	09.06.2023	25.07.2023	09.06.2023
28.05.2023	09.06.2023	26.05.2023	26.05.2023
10.06.2023	09.06.2023	28.05.2023	09.06.2023

Place of supply- Immovable Property – Provisions in the GST law have been laid down in two distinct categories for place of supply of services that are governed by the two distinct sections – Section 12 and 13. Section 12 of the IGST Act, 2017 governs services under GST where the location of the supplier as well as the recipient is within India. However, Section 13 shall be applicable for services under GST when then location of the recipient of service or the location of the supplier of service is outside India i.e. either the supplier or the recipient of service is located outside India.

Within these extensive sections, provisions regarding the services related to immovable property have been laid down in Section 12(3) and Section 13(4) that elaborate on the determination of the place of supply under various circumstances and conditions. Explanations and circulars explaining the intent of the sections are continuously introduced by the lawmakers to avoid litigations and clarifying the issues being raised regularly on the issues related to this issue.

Meaning of an Immovable Property – It is an immovable object, a property that cannot be moved without destroying or altering it. It is fixed to the earth, such as a piece of land or a house. It includes premises, property rights (for example, inheritable building right), houses, land and associated goods, and chattels if they are located on, or below, or have a fixed address.

Services related to immovable property – Section 12(3) – When the location of the supplier as well as the recipient is within India

Case I – Immovable Property – Located In India

Services

• Directly in relation to an immovable property including services of interior decoration, architects, surveyors, engineers;
• By way of lodging accommodation by a hotel, inn, club, guest house by whatever name called including a house boat or any other vessel;
• By way of accommodation in any immovable property for organizing any marriage function, social, cultural, religious or business function, including services provided in relation to such function at such property;
• Any ancillary services to (a), (b) and (c);

Place of Supply of Services under GST

Location where the immovable property or boat or vessel, is located or is intended to be located.

Case II – Immovable Property – Located outside India

If the location of the recipient and supplier is in India but the immovable property is located outside India;

Place of Supply of Services under GST

Location of the recipient.

Examples

(a) Mr. Harish from Gurgaon has approached an architect Mr. Fahim from Goa seeking his professional services in his house in Jaipur.

Place of Supply of Services under GST – Location where the house is located i.e. Jaipur.

(b) Mr. Harish from Gurgaon has approached an architect Mr. Fahim from Goa seeking his professional services in an immovable property in Hong Kong.

Place of Supply of Services under GST – Since both the supplier of service and the recipient of service is located in India and the immovable property is located outside India, it will be Gurgaon i.e. the Location of the recipient.

Services related to immovable property – Section 13(4) – When the location of the supplier or the recipient is outside India

Transaction – Services supplied directly in relation to an immovable property, including services supplied in regard by experts and estate agents, supply of accommodation by way hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators.

Here, the place where the property is located or is intended to be located will be considered.

Example – Mr. Shiva from Jaipur has been engaged by Mr. Khan from Singapore for providing architecture services for his property in Sri Lanka. Here, the place will be Sri Lanka i.e. the place where the immovable property is located or is intended to be located.

However, where the services are provided in more than one location including a location in the taxable territory, then the provisions of Section 13(6) will be applicable.

Further, where the services are provided in more than State or Union Territory, then the provisions of Section 13(7) read with Rule 8 of the IGST Rules, 2017 will be applicable.

Rule 8 has been inserted in IGST Rules, 2017 vide Notification No. 4/2018 w.e.f. 01.01.2019 which provides that the value of supply shall be determined in accordance with the provisions of Rule 4 of the IGST Rules, 2017.

Rule 4 of the IGST Rules, 2017 has been inserted vide Notification No. 4/2018 – IT w.e.f. 01.01.2019 for determination of place of supply of services under GST, where the immovable property or boat or vessel is located in more than one state or one Union Territory, stating that the supply of such services shall be treated as made in each of the respective States or Union Territories on proportionate basis as explained under:-

(a) Services by way of lodging accommodation by a hotel, inn, club, guest house by whatever name called including a house boat or any other vessel

• Where such property is a single property located in two or more contiguous States or UTs or both

In proportion to the area of the immovable property lying in each State or UT.

• Cases except where such property is a single property located in two or more contiguous States or UTs or both

In proportion to the number of nights stayed in such property.

(b) Services provided by way of accommodation in any immovable property for organizing any marriage function, etc.

In proportion to the area of the immovable property lying in each State or UT.

Let us understand this extract of Rule 4 of IGST Rules, 2017, with the help of the following examples:-

(a) Deluxe Developers have a huge area of land in Uttar Pradesh and some adjoining parts of Bihar measuring about 30,000 sq. ft. in total. The area is Uttar Pradesh is around 20,000 sq. ft. and the rest of the land is in Bihar.  Deluxe Developers have engaged an architect for some development work on this land for an aggregate amount of Rs. 60,000.

The place of supply of service under GST will be apportioned on the basis of the area of the land in Uttar Pradesh and Bihar i.e. in the ratio of 2:1.

Therefore,

Value of supply in Uttar Pradesh = Rs. 40,000/- Value of supply in Bihar = Rs. 20,000/-

(b) Mr. Malik has booked rooms in the 2 properties Platinum Hotel at Agra for 3 days and Jaipur for 4 days for his business trip. The hotel has raised a single invoice of the consolidated tariff of 7 days for Rs. 70,000/-.

The place of supply of service under GST will be apportioned on the basis of the number of nights stayed in each property, i.e., in the ratio of 3:4 for Agra and Jaipur.

Therefore,

Value of supply in Agra = Rs. 30,000/- Value of supply in Jaipur = Rs. 40,000/-

(c) Cases except where such property is a single property located in two or more contiguous States or UTs or both

In proportion to the number of nights stayed in such property.

House Boat Accommodation Services

For the services provided by way of lodging accommodation by a house boat or any other vessel and services ancillary to such services, the place of supply of service under GST is determined in proportion on the basis of the declaration made to the effect by the service provider.

Example – M/s Seashore Company provided accommodation services in a house boat to its customers that was in Maharashtra for 10 days and moved to Goa for 2 days. Therefore, the place of supply will be apportioned between Maharashtra and Goa in the ratio of 5:1 on the basis of the declaration given by M/s Seashore Company.

For deductees with inoperative PAN , u/s 206AA of Income Tax Act , 1961, a higher rate of tax that was required to be deducted. CBDT has released a circular on 23rd April, 2024 for relief to the TDS deductors. This has come in light of the grievances faced by deductors/collectors who had received notices for short deduction of tax as per section 206AA of Income Tax Act for deductees who had inoperative PAN. Thus, to address this issue, there has been a partial modification in Circular 3 of 2023 dated 28.03.2023 issued by the CBDT earlier.

Relief from Sec 206AA of Income Tax Act, 1961 as per the latest circular

As per Circular No. 6/2024 issued by CBDT on 23^rd April, 2024, for transactions carried out up to 31st March 2024, and in cases where the PAN becomes operative (due to linkage with Aadhaar) on or before 31st May 2024, there shall be no liability on the deductor/collector to deduct/collect tax under section 206AA/206CC, as applicable. The deduction/collection mandated by other provisions of Chapter XVII-B or Chapter XVII-BB of the Act shall be applicable.

Section 206AA of Income Tax Act, 1961

As per Section 206AA of Income Tax Act, 1961, if a taxpayer fails to furnish their PAN to the person responsible for making the payment, TDS will be deducted at a higher rate. The higher TDS rates applicable in such cases are as follows:

• At the rates specified in the relevant provision of the Income Tax Act;
• At the prevailing rate;
• At a fixed rate of 20%.

This provision is applicable to both resident taxpayers and non-resident taxpayers.

What does inoperative PAN mean?

An inoperative PAN can arise due to non-linkage with Aadhaar i.e. a situation where a PAN (Permanent Account Number) issued by the Income Tax Department becomes invalid or unusable because it has not been linked with the Aadhaar number as mandated by the government. The Government of India has made it mandatory to link PAN with Aadhaar to curb tax evasion and streamline financial transactions.

Failure to link PAN with Aadhaar can result in the PAN becoming inoperative, which may lead to various inconveniences during financial transactions. Therefore, it is important for taxpayers to ensure that their PAN is linked with their Aadhaar to avoid any issues.

Circular 3 of 2023 dated 28.03.2023 for inoperative PAN

Circular No. 3 of 2023 dated 28.03.2023 issued by the Board explains the consequences of a PAN becoming inoperative as follows:

Following the notification substituting rule 114AAA of the Income-tax Rules, 1962, vide notification no. 15 of 2023 dated 28th March, 2023, it is clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AAA of the Income-tax Act, 1961, read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative:

• Refund of any amount of tax or part thereof due under the provisions of the Act shall not be made to him,
• Interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative,
• Where tax is deductible under Chapter XVII-B in case of such person, such tax shall be deducted at a higher rate, in accordance with the provisions of section 206AA of Income Tax Act,
• Where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at a higher rate, in accordance with the provisions of section 206CC.

The specified consequences shall take effect from 1st July, 2023, and will continue until the inoperative PAN becomes operative again.

Issues faced by the Deductors u/s 206AA of Income Tax Act

CBDT had received numerous grievances from taxpayers who have been issued notices for default in ‘short-deduction/collection’ of TDS/TCS. These notices were issued because the deductees/collectees were found to have inoperative PAN. In such cases, as the deduction/collection was not made at a higher rate, demands were raised by the Department against the deductors/collectors during the processing of TDS/TCS statements under section 200A or under section 206CB of the Act.

To read about the latest changes in the E-invoice portal, check out the guide here.

Consideration is the basis for deciding the value of supply of goods or services or both and thus is essentially the basis for determination of the tax liability. Since the term consideration has been defined in several laws like the Indian Contract Act, 1872, the lawmakers deemed it fit to lay down the definition of this crucial term in GST Act to prevent any misinterpretation of the definition. This can be in various forms like monetary, non-monetary, deposits, and subsidy and thus we need to understand whether the amount is to be treated as consideration or not.

Consideration – Definition

The term “consideration” has been defined u/s 2(31) of the CGST Act, 2017 in relation to the supply of goods or services or both include:-

• Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidies given by the Central Government or State Government;
• The monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any person but shall not include any subsidies given by the Central Government or State Government;

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply.

Types of Consideration

The consideration for the supply of goods or services or both can either be in monetary form or in non-monetary form. The monetary form includes payments received in cash, cheque, credit and debit cards, bank transfers and auto-debit from bank. The non-monetary form is the payment in kind i.e. payment can include goods or services being provided as payment. The value of this non-monetary payment is usually the monetary value of its equivalent.

For example – Mr. Amit provides architecture services to an unrelated person Mr. Sushil. In lieu of his services, Mr. Sushil gave him 10 grams of gold, thus this will be treated as a non-monetary form of payment.

Treatment for deposits received

The basic condition for a deposit to be included as consideration is that it must form part of the payment for the supply. Let us understand this in detail in light of the following nature of deposits:-

• The deposit is in the nature of forfeiture deposit i.e. payment for non-completion or non-performance of the contract – This will not be included since there is no supply in this case.
• Security deposits will not be included since these deposits are only for security purposes and for no real supply of goods or services.

Therefore, the amount of deposit is not to be treated as a part of payment unless adjusted as consideration.

Subsidy – Government or Non-Government Subsidies

A subsidy is a form of financial aid or support offered to institutions or individuals, often by the government. It can be provided in the form of cash payments or tax reductions. It is aimed at promoting the economic and social objectives of the government, ultimately benefiting the public.

Any subsidy received from the Central or State Government will not be included as a part of consideration.

For example – Subsidy for gas received from the government will not form part of consideration.

Subsidies received from any non-government institutions having a direct link with the supply of goods or services or both, will be treated as a part of consideration. However, if received from any non-government institutions without having a direct link with the supply of goods or services or both, will not be treated as a part of consideration. Thus, establishing a direct link with the supply is crucial for including the amount

For example – Subsidies received from a non-government trust for flood relief to a farmer will not be treated as consideration.

Payment can be received from any person

It is not mandatory that the payment for the supply of goods or services is from the recipient of the supply. The payment received from any person with whom a direct link can be established can also be treated as consideration for the supply.

Fines and Penalties Charged

Generally, the fines or penalties charged are not treated as consideration; however, in a case where the fine or penalty has been levied for additional payment for the delayed supply or for the fulfillment of the agreement, it will be included.

For example – Fine for littering tourist places will not be treated as consideration however; fine or penalty charge for delayed return of hired goods will be treated as consideration.

Grants or Charitable Activities

The basis for determining whether the grants are to be treated as consideration or not depends on if the person giving the grant is receiving benefits in return or no such benefit is being received by him.

If the person giving the granting is not receiving any benefit in return, then this will not be included; however, if the person giving the granting is receiving any benefit in return, then this will be included.

For example – A pharmaceutical company has given a grant to a lab for studying the impact of the constituents of its medicine under research phase. Here, the benefit will be received by the pharmaceutical company only and thus this grant will be treated as consideration.

Important Case Study – M/s Abbott Healthcare Private Limited

M/s Abbott Healthcare Private Limited placed its own diagnostic instruments at the premises of unrelated hospitals, labs etc. for their uses for a specified period of time without any consideration as per the agreement. The customers only had the right to use the instruments and these instruments were returnable at the end of such specified period or at the earlier termination of the agreement. As per the agreement, the customers were required to purchase the re-agents and disposables at the prices specified in the agreement. The company only charged GST on supply of these disposables.

Initially the AAR, Kerala held that this would be a composite supply where the principal supply was the right to use the instruments for any purpose and was accordingly liable to GST. However, the High Court quashed the order and remanded the order back to AAR for fresh determination of the question asked by the assesse.

Finally, the AAAR concluded that the act of assurance from the part of the customers for exclusive usage of re-agents and disposables in the instruments according to the approved directions of the assesse and the obligation to purchase minimum assured quantity on the agreed price from the appellant assesse constituted a valid consideration for inducement of the supply of these services against the activity of placement of the instruments by the assessee at the customer’s premises.