GST: What is treatment for supplies made within the warranty period?

What is the difference between cross-charge and distribution of credit by an input service distributor?

Cross-charge implies a situation wherein one entity incurs certain expenses for other group entities on administrative convenience. In such a case, this is charged back to the respective entities on whose account the expenditure has been incurred. Distribution of input tax credit by an input service distributor is a mechanism by a group entity which receives invoices for payment for other group companies that have received the taxable services. 

What is the treatment for supplies made within the warranty period under the goods and services tax (GST) and the documentation required for transport of goods within a warranty period?

Since the consideration for any warranty services/replacements is in-built in the price of goods at the time of supply, the supplies during a warranty period should be made free of cost. Accordingly, no GST shall be payable on such supplies. Further, the supplier should be required to transport the goods covered under warranty under cover of a delivery challan. 

Is there any prescribed limit below which a registered person is not liable to deposit tax under reverse charge? Also, what are the documents to be issued in the case of a tax deposit under it? 

Under GST law, a reverse charge on the supply of goods or services from an unregistered person to a registered person has been deferred until March 31, 2018. For other supplies of goods or services, subject to the mandatory reverse charge, there is no prescribed limit, and the recipient should be required to discharge GST liabilities irrespective of the amount paid. Further, the recipient should be required to issue a self-invoice at the time of receipt of goods or services and a payment voucher at the time of making payment. 

Amit Bhagat

What will be the value of supply for charging taxes between related persons? 

This should be the open market value of the goods. If this value cannot be ascertained, the value of supply of goods or services of like kind and quantity should be considered. If that is also not determinable, 110 per cent of the cost of production can be considered as value for computation of GST. 

Clarify if the invoices raised by an advocate shall always come under the reverse charge mechanism or would be dependent upon the nature of services provided by him. 

Services supplied by an individual advocate by way of representational services before any court, tribunal or authority or by a firm of advocates by way of legal services are covered under the reverse charge mechanism. GST needs to be paid by the recipient of such services. Further, it has been clarified by the finance ministry that legal services are “any service provided in relation to advice, consultancy or assistance in any branch of law in any manner and includes representational services before any court, tribunal or authority”. Accordingly, reverse charge applicability in respect of services rendered by an advocate should be dependent on the nature of services provided by an advocate.

If a restaurant serves alcohol, should it issue separate invoices for alcohol and food or can both be shown on the same invoice? 

It can issue a single invoice. A registered person supplying taxable as well as exempted goods or services or both to an unregistered person can issue a single ‘invoice-cum-bill of supply’ for all such supplies. 
 

The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in