CA NIKHIL GUPTAVINOD KUMAR GUPTA & ASSOCIATES

MOBILE No. 9760025882

Sec 35(5)Every registered person whose turnover during a financialyear exceeds the prescribed limit shall get his accounts audited by achartered accountant or a cost accountant Accounts and shall submita copy of the audited annual accounts, the reconciliation statementunder sub-section (2) of section 44 and such other documents in suchform and manner as may be prescribed.Rule 80(3)Every registered person whose aggregate turnoverduring a financial year exceeds two crore rupees shall get hisaccounts audited as specified under sub-section (5) of section 35and he shall furnish a copy of audited annual accounts and areconciliation statement, duly certified, in FORM GSTR-9C,electronically through the common portal either directly orthrough a Facilitation Centre notified by the Commissioner.

DEFINITIONS

Sec 2 (6) “aggregate turnover” means the aggregate value of alltaxable supplies (excluding the value of inward supplies on whichtax is payable by a person on reverse charge basis),exemptsupplies, exports of goods or services or both and inter-Statesupplies of persons having the same Permanent Account Number,to be computed on all India basis but excludes central tax, Statetax, Union territory tax, integrated tax and cess;Sec 2(112) “turnover in State” or “turnover in Union territory”means the aggregate value of all taxable supplies (excluding thevalue of inward supplies on which tax is payable by a person onreverse charge basis) and exempt supplies made within a State orUnion territory by a taxable person, exports of goods or services orboth and inter-State supplies of goods or services or both madefrom the State or Union territory by the said taxable person butexcludes central tax, State tax, Union territory tax, integrated taxand cess;

DEFINITIONS

Section 2(13): Audit means the examination of records,returns and other documents maintained or furnished by theregistered person under this Act or the rules made thereunder orunder any other law for the time being in force to verify thecorrectness of turnover declared, taxes paid, refund claimedand input tax credit availed, and to assess his compliance withthe provisions of this Act or the rules made thereunder.

Section 2(41): document includes written or printedrecord of any sort and electronic record as defined in clause (t)of section 2 of the Information Technology Act, 2000;Data, record or data generated received or sent in anelectronic form or microfilm etc

DEFINITIONS

Form GSTR-9CSee rule 80(3)

Part - A- Reconciliation Statement

Pt. I Basic details

1 FinancialYear

2 Gstin

3A Legal name < auto>

3B Trade name(if any)

<auto>

4 Are you liable to audit under any Act? <<Please Specify>>

4 Are you liable to audit under any act? <<please specify>>

(amount in ? in all tables)

Pt.Ii

Reconciliation of turnover declared in audited annual financial statement withturnover declared in annual return (gstr9)

5 Reconciliation of gross turnover

A

B

Turnover (including exports) as per audited financial statements for the state / ut (for multi-gstin units under same

pan the turnover shall be derived fromthe audited

Annual financial statement)

Unbilled revenue at the beginning of financial year (+)

POINTS INSTRUCTION

5A The turnover as per the audited annual financial statement shall be declared here.There may be cases where multiple gstins (state-wise) registrations exist on thesame pan. This is common for persons / entities with presence over multiplestates. Such persons / entities, will have to internally derive their gstin wiseturnover and declare the same here. This shall include export turnover (if any). Itmay be noted that reference to audited annual financial statement includesreference to books of accounts in case of persons/ entities having presence over multiple states.

5B Unbilled revenue which was recorded in the books of accounts on the basis ofaccrual system of accounting in the last financial year and was carried forward tothe current financial year shall be declared here. In other words, when gst ispayable during the financial year on such revenue (which was recognized earlier),the value of such revenue shall be declared here.

(for example, if rupees ten crores of unbilled revenue existed for the financial year2016-17, and during the current financial year, gst was paid on rupees four croresof suchrevenue, then value of rupees four crores rupees shall be declared here)

C

D

E

F

G

H

Unadjusted advances at the end of the financial year (+)

Deemed supply under schedule I (+)

Credit notes issued after the end of the financial year But reflected in the annual

return(+)

Trade discounts accounted for in the audited annual Financial statement but are not

permissible under gst (+)

Turnover from april 2017 to june 2017 (-)

Unbilled revenue at the end of financial year (-)

POINTS INSTRUCTION

5C Value of all advances for which gst has been paid but the same has not beenrecognized as revenue in the audited annual financial statement shall be Declaredhere.

5D Aggregate value of deemed supplies under schedule i of the cgst act, 2017 shall bedeclared here. Any deemed supply which is already part of the turnover in theaudited annual financial statement is not required to be Included here.

5E Aggregate value of credit notes which were issued after 31st of march for anysupply accounted in the current financial year but such credit notes wereReflected in the annual return (gstr-9)shall be declared here.

5F Trade discounts which are accounted for in the audited annual financialStatement but on which gst was leviable(being not permissible) shall be declaredhere.

5G Turnover included in the audited annual financial statement for april 2017 to June2017 shall be declared here.

5H Unbilled revenue which was recorded in the books of accounts on the basis ofaccrual system of accounting during the current financial year but gst was notpayable on such revenue in the same financial year shall be declared here.

I

J

K

L

M

N

O

Unadjusted advances at the beginning of the financial Year

(-)Credit notes accounted for in the audited

annual Financial statement but are not permissible under gst

(-)

Adjustments on account of supply of goods by SEZ Units to DTA units

(-)

Turnover for. the period under composition scheme (-)

Adjustments in turnover under section 15and rules Thereunder

(+/-)

Adjustments in turnover due to foreignexchange

Fluctuations(+/-)

Adjustments in turnover due to reasons not

listed above(+/-)

POINTS INSTRUCTION

5I Value of all advances for which gst has not been paid but the same has beenRecognized as revenue in the audited annual financial statement shall bedeclared here.

5J Aggregate value of credit notes which have been accounted for in the auditedAnnual financial statement but were not admissible under section 34 of the cgstact shall be declared here.

5K Aggregate value of all goods supplied by SEZs to DTA units for which the DTAunits have filed bill of entry shall be declared here.

5L There may be cases where registered persons might have opted out of thecomposition scheme during the current financial year. Their turnover as per theaudited annual financial statement would include turnover both as compositiontaxpayer as well as normal taxpayer. Therefore, the turnover forWhich gst was paid under the composition scheme shall be declared here.

5M Any difference between the turnover reported in the annual return (gstr 9) andturnover reported in the audited annual financial statement due to difference invaluation of supplies shall be declared Here.

5N Any difference between the turnover reported in the annual return (gstr9)And turnover reported in the audited annual financial statement due to foreignexchange fluctuations shall be declared here

5O Any difference between the turnover reported in the annual return (gstr9) and turnover reported in the audited annual financial statement due toReasons not listed above shall be declared here.

P

Q

R

Annual turnover after adjustments as above <auto>

Turnover as declared in annual return (gstr9)

Un-reconciled turnover (q - p) AT1

6 Reasons for un - reconciled difference in annual gross turnover

A

B

Reason 1 <<text>>

Reason 2 <<text>>

POINTS INSTRUCTION

5Q Annual turnover as declared in the annual return (gstr 9) shall be declared here.This turnover may be derived from sr. No. 5n, 10 and 11 of annualReturn (gstr 9).

6 Reasons for non-reconciliation between the annual turnover declared in theAudited annual financial statement and turnover as declared in the annual return(gstr 9) shall be specified here.

C Reason 3 <<text>>

7 Reconciliation of taxable turnover

A

B

C

D

E

Annual turnover after adjustments (from 5p above) <auto>

Value of exempted, nil rated, non-gst supplies, no-supplyTurnover

Zero rated supplies without payment of tax

Supplies on which tax is to be paid by the recipient on reverseCharge basis

Taxable turnover as per adjustments above (a-b-c-d) <auto>

POINTS INSTRUCTION

7 The table provides for reconciliation of taxable turnover from the audited Annualturnover after adjustments with the taxable turnover declared in annual return(gstr-9).

7A Annual turnover as derived in table 5p above would be auto-populated here.

7B Value of exempted, nil rated, non-gst and no-supply turnover shall be declaredhere. This shall be reported net of credit notes, debit notes and Amendments ifany.

7C Value of zero rated supplies (including supplies to sezs) on which tax is not paidshall be declared here. This shall be reported net of credit notes, debit Notes andamendments if any.

7D Value of reverse charge supplies on which tax is to be paid by the recipient Shallbe declared here. This shall be reported net of credit notes, debit notes Andamendments if any.

7E The taxable turnover is derived as the difference between the annual turnoverafter adjustments declared in table 7a above and the sum of all supplies(exempted, non-gst, reverse charge etc.) Declared in table 7b, 7c and 7d Above.

F Taxable turnover as per liability declared in annual return(gstr9)

G Unreconciled taxable turnover (f-e) AT 2

8 Reasons for un - reconciled difference in taxable turnover

A Reason 1 <<text>>

B Reason 2 <<text>>

C Reason 3 <<text>>

POINTS INSTRUCTION

7F Taxable turnover as declared in table 4n of the annual return (gstr9) shall Bedeclared here.

8 Reasons for non-reconciliation between adjusted annual taxable turnover asDerived from table 7e above and the taxable turnover declared in table 7f shall bespecified here.

9 Reconciliation of rate wise liability and amount payable thereon

A

B

C

Tax payable

Description Taxable value CentralTax

State tax / ut tax

Integrated tax Cess, if Applicable

1 2 3 4 5 6

5%

5% (rc)

12%

Pt.III Reconciliation of tax paid

POINTS INSTRUCTION

9 The table provides for reconciliation of tax paid as per reconciliation statement and amount of tax paid as declared in annual return (gstr 9). Under the head labelled “RC”, supplies where tax was paid on reverse charge basis by the recipient (i.e. The person for whom reconciliation statement has been Prepared ) shall be declared.

Part III consists of reconciliation of the tax payable as per declaration in the reconciliation statement and the actual tax paid as declared in annual return (GSTR 9). The instructions to fill this part are as follows :-

D

E

F

G

H

I

J

12% (rc)

18%

18% (rc)

28%

28% (rc)

3%

0.25%

K

L

M

N

O

P

Q

0.10%

Interest

Late fee

Penalty

Others

Total amount to be paid as per Tables above

<auto> <auto> <auto> <auto>

Total amount paid as declared in Annual return (gstr 9)

POINTS INSTRUCTION

9P The total amount to be paid as per liability declared in table 9A to 9O is autoPopulated here.

9Q The amount payable as declared in table 9 of the annual return (gstr9) shall bedeclared here. It should also contain any differential tax paid on table 10 or 11 ofthe annual return (gstr9).

R Un-reconciled paymen T of amount Pt 1

10 Reasons for u N-reconciled payment o F amount

A

B

C

Reason 1 <<text>>

Reason 2 <<text>>

Reason 3 <<text>>

11 Additional amount payable but not paid (due to reasons specified under tables6,8 and 10 above)

To be paid through cash

POINTS INSTRUCTION

10 Reasons for non-reconciliation between payable / liability declared in table 9Pabove and the amount payable in table 9Q shall be specified here.

11 Any amount which is payable due to reasons specified under table 6, 8 and 10Above shall be declared here.

Description Taxable value CentralTax

State tax / ut tax

Integrated tax Cess, if Applicable

1 2 3 4 5 6

5%

12%

18%

28%

3%

0.25%

0.10%

Interest

Late fee

Penalty

Others(pleasespecify)

Pt. IV Reconciliation of input tax credit (itc)

12 Reconciliation of net input tax credit (itc)

A

B

C

D

E

F

Itc availed as per audited annual financial statement for the State/ ut (for multi-gstin units under same pan this should be derived

from books of accounts)

Itc booked in earlier financial years claimed in currentFinancial year (+)

Itc booked in current financial year to be claimed in Subsequent financial years

(-)

Itc availed as per audited financial statements or books ofAccount <auto>

ITC claimed in annual return (gstr9)

Un-reconciled ITC ITC 1

POINTS INSTRUCTION

12A Itc availed (after reversals) as per the audited annual financial statement shall bedeclared here. There may be cases where multiple gstins (state- wise)registrations exist on the same pan. This is common for persons / entities withpresence over multiple states. Such persons / entities, will have to internallyderive their itc for each individual gstin and declare the same here. It may benoted that reference to audited annual financial statement includes reference tobooks of accounts in case of persons / entities having presence over multiplestates.

12B Any itc which was booked in the audited annual financial statement of Earlierfinancial year(s)but availed in the itc ledger in the financial year for Which thereconciliation statement is being filed for shall be declared here. This shallinclude transitional credit which was booked in earlier years but Availedduringfinancial year 2017-18

12C Any itc which has been booked in the audited annual financial statement ofThe current financial year but the same has not been credited to the itc ledger for the said financial year shall be declared here.

12D Itc availed as per audited annual financial statement or books of accountsAs derived from values declared in table 12a, 12b and 12c above will be auto-populated here.

12E Net itc available for utilization as declared in table 7j of annual return(gstr9) shall be declared here.

13 Reasons for un-reconciled difference in itc

A

B

C

Reason 1 <<text>>

Reason 2 <<text>>

Reason 3 <<text>>

14 Reconciliation of itc declared in annual return (gstr9) with itc availed on Expenses as per audited annual financial statement or books of account

Description Value

Amount of total itc

Amount of eligible itc availed

1 2 3 4

POINTS INSTRUCTION

13 Reasons for non-reconciliation of itc as per audited annual financial statement orbooks of account (table 12d) and the net itc (table12E) Availed in the annualreturn (gstr9) shall be specified here.

14 This table is for reconciliation of itc declared in the annual return (gstr9) againstthe expenses booked in the audited annual financial statement or books ofaccount. The various sub-heads specified under this table are general expenses inthe audited annual financial statement or books of account on which itc may ormay not be available. Further, this is only an indicative list of heads under whichexpenses are generally booked. Taxpayers may add or delete any of these headsbut all heads of expenses on which gst has been Paid / was payable are to bedeclared here.

A

B

C

D

E

Purchases

Freight / carriage

Power and fuel

Imported goods (including received from

SEZs)

Rent and insurance

F

G

Goods lost, stolen Destroyed, written off or

disposed of by way of gift or free samples

Royalties

H

I

J

K

L

M

N

Employees' cost (salaries, wages,

bonus etc.)

Conveyance charges

Bank charges

Entertainment charges

Stationery expenses (including postage

etc.)

Repair and Maintenance

Other miscellaneous Expenses

O Capital goods

P Any other expense 1

Q Any other expense 2

R Total amount of eligible itc availed <<auto>>

S Itc claimed in annual return (gstr9)

T Un-reconciled itc Itc 2

15 Reasons for un - reconciled difference in itc

POINTS INSTRUCTION

14R Total itc declared in table 14a to 14q above shall be auto populated here.

14S Net itc availed as declared in the annual return (gstr9) shall be declared Here.Table 7j of the annual return (gstr9) may be used for filing this table.

15 Reasons for non-reconciliation between itc availed on the various expenses Declared in table 14r and itc declared in table 14s shall be specified here.

A Reason 1 <<text>>

B Reason 2 <<text>>

C Reason 3 <<text>>

16

Tax payable on un-reconciled difference in itc (due to reasons specified in 13And 15 above)

Description Amount payable

Central tax

State/utTax

POINTS INSTRUCTION

16 Any amount which is payable due to reasons specified in table 13 and 15Above shall be declared here.

IntegratedTax

Cess

Interest

Penalty

Pt.V Auditor’s recommendation on additional liability due to non-reconciliation

To be paid through cash

Description Value CentralTax

State tax / ut tax

Integrated tax Cess, if Applicable

1 2 3 4 5 6

5%

12%

18%

28%

3%

0.25%

0.10%

Input tax Credit

Interest

Late fee

Penalty

Any other amount paid for supplies

not included in annual

return (gstr 9)Erroneous

refund to be Paid back

Outstanding Demands to

be settled

Other (pl. Specify)

Verification:I hereby solemnly affirm and declare that the information given herein above is true and correct to the best of my knowledge and belief and nothing has been concealed there from.

**(signature and stamp/seal of the auditor)Place: ……………Name of the signatory: …………………Membership no:………………Date: ……………Full address: ………………………

Part – B- certificationCertification in cases where the reconciliation statement (form gstr-9c) is drawnup by the person who had conducted the audit:

* i/we have examined the—Balance sheet as on ………The *profit and loss account/income and expenditure account for the period beginningfrom ………..…to ending on ……., andThe cash flow statement for the period beginning from ……..…to ending on ………, —attached herewith, of m/s …………… (name), (address),..…………………(gstin).Based on our audit i/we report that the said registered person—*has maintained the books of accounts, records and documents as required by theigst/cgst/<<>>gst act, 2017 and the rules/notifications made/issued thereunder*has not maintained the following accounts/records/documents as required by theigst/cgst/<<>>gst act, 2017 and the rules/notifications made/issued thereunder:1.2.(a) *i/we report the following observations/ comments / discrepancies / inconsistencies; ifany:……………………………………(b) *i/we further report that, -*i/we have obtained all the information and explanations which, to the best of *my/ourknowledge and belief, were necessary for the purpose of the audit/ information andexplanations which, to the best of

*my/our knowledge and belief, were necessary for the purpose of the audit were notprovided/partially provided to us.

In *my/our opinion, proper books of account *have/have not been kept by the registeredperson so far as appears from*my/ our examination of the books.I/we certify that the balance sheet, the *profit and loss/income and expenditure accountand the cash flow statement are *in agreement/not in agreement with the books ofaccount maintained at the principal place of business at ……………………and **……………………additional place of business within the state.The documents required to be furnished under section 35 (5) of the cgst act andreconciliation statement required to be furnished under section 44(2) of the cgst act isannexed herewith in form no. Gstr-9c.In *my/our opinion and to the best of *my/our information and according to explanationsgiven to *me/us, the particulars given in the said form no.gstr-9c are true and correctsubject to following observations/qualifications, if any:

(a) ……………………………………………………………………………………(b)…………………………………………………………………………………(c) ……………………………………………………………………………………

**(signature and stamp/seal of the auditor) place: ……………Name of the signatory …………………Membership no………………Date: ……………Full address ………………………

Certification in cases where the reconciliation statement (form gstr-9c) isdrawn up by a person other than the person who had conducted the audit ofthe accounts:*i/we report that the audit of the books of accounts and the financial statements ofm/s.………...........…………………. (name and address of the assessee with gstin) wasconducted by m/s. (full name and addressOf auditor along with status), bearing membership number in pursuance of theprovisions of the …………………………….act, and *i/we annex hereto a copy of theiraudit report dated along with a copy of each of :-Balance sheet as on ………The *profit and loss account/income and expenditure account for the periodbeginning from ………..…to ending on ,The cash flow statement for the period beginning from ……..…to ending on ,andDocuments declared by the said act to be part of, or annexed to, the *profit and lossaccount/income and expenditure account and balance sheet.I/we report that the said registered person—*has maintained the books of accounts, records and documents as required by theigst/cgst/<<>>gst act, 2017 and the rules/notifications made/issued thereunder*has not maintained the following accounts/records/documents as required by theigst/cgst/<<>>gst act, 2017 and the rules/notifications made/issued thereunder:1.2.3.

The documents required to be furnished under section 35 (5) of the cgst act andreconciliation statement required to be furnished under section 44(2) of the cgst actis annexed herewith in form no.gstr-9c.In *my/our opinion and to the best of *my/our information and according toexamination of books of account including other relevant documents andexplanations given to *me/us,

The particulars given in the said form no.9c are true and correct subject to thefollowing observations/qualifications, if any:(a) …………………………….…………………………….………………………(b) …………………………….…………………………….………………………(c) …………………………….…………………………….……………………………………………………………….

**(signature and stamp/seal of the auditor) place: ……………Name of the signatory: …………………Membership no: ………………Date: ……………Full address: ……………………

ISSUES IN GST AUDIT

Whether Exchange (barter) is a Supply in itself or Payment for Consideration?

Section 7: All forms of supply of goods or services or bothsuch as sale, transfer, barter, exchange, licence, rental, leaseor disposal made or agreed to be made for a considerationby a person in the course or furtherance of business.

Eg: Exchange of Watch for a Laptop.

Supplies made to related parties and distinct persons without consideration , transfer & disposal of goods and putting goods

for use other than business even if without consideration

Supplies made by employer to its employees at subsidised rates Supplies made to relatives or distinct persons without

consideration. Supplies made by principal to agent or by agent to Principal Import of services from a relative person from establishment

outside india. Where goods forming part of assets of business are transferred

to disposed even without consideration. Where goods are put to private use or made available to any

person for use other than business purpose.

CLASSIFICATION

What if the supplier charges higher rate of tax to you than the prescribed rate , say 18% instead of 12%?

Section 2(21): Central tax means the central goods andservices tax levied under section 9.

Notification 1/2017 and 11/2017 are prescribed undersection 9. So if we receive supplies at higher rate thanmentioned in the notifications than we are not paying “Tax”we are merely paying an extra amount, for which no credit isavailable.

Classification difficulty in case of product having multiple usage and applicable tax rate

Cenara udyog a company manufacturing bearings is supplyingproduct “Ball B 1212 to Agriculture Industry which is Exempt,Usha Fans taxed at 12% and Honda Motors for Motor Cars taxedat 28%.

Agra ICAI is organising a seminar in Howards Inn. Where in theyare occupying spacious convention hall, food and state of artaudio visual set-up. Which is principal Supply?

Classification difficulty in case of different Rulings coming from different AAR

Classification issues in case of Solar Plants installation. Some AARholds it supply of services and some AAR holds it supply ofgoods. Difference in rates, time of supply and place of supplyhave serious implications. Auditor should look deep into thecontract executed and check if there is some camouflage orintention to evade tax.

1.Notification suspending 9(4) from 13th October 20172.Notification 40/2017 CGST relaxing tax on receipt of advance forgoods for suppliers having turnover upto 1.50 cr (13th oct). ThereafterNotification 66/2017 CGST exempting all the suppliers irrespective ofthe turnover(15th Nov)3. In case of supply of motor vehicle (on which itc is not claimed andfulfilling other conditions, 65% tax is applicable vide notification no37/2017 cgst(rate) dated 13th oct, thereafter tax is applicable onmargin w.e.f. 25th Jan only on margin vide notfn no 8/2018 cgst(rate)4. In case of composition dealers, 1% tax on manufacturers and 1%tax on taxable supplies on traders applicable vide notfn no 1/2018cgst.

APPLICABILITY OF VARIOUS NOTIFICATIONS, ORDERS, CIRCULARS AND THE DATES FROM WHICH THEY CAME INTO FORCE

INPUT TAX CREDIT

DIFFERENCE BETWEEN ISD AND CROSS CHARGING

In case of ISD Credit is distributed to various distinct persons.In case of Cross Charge there is an element of supply being provided.ITC can only be availed in case of supplies used or intended to be used inthe course or furtherance of business. Here ISD helps to distribute thecredit and there is no credit loss.Cross charge is necessary is supplies are being made to distinct persons.

Examples of supplies for Cross Charge and ISD

1. Sales, Marketing and Advertising Expenses2. Advertisement material distributed to various branches.3. Tax and Audit Compliance.4. Corporate Guarantee provided by HO to its Subsidiary.5. Services provided by employees of branch to HO.

A CA firm issues invoices centrally from HO in Mumbai, while the UPClients are catered by the Branch located in Agra. An invoice needsto be raised from UP on Mumbai HO.

Wrong Availment or Wrong utilization of ITC or Amount in Cash Ledger

Wrong availment or taking of ITC refers to the position wherein ITC is reflecting in the Credit Ledger and the same is not reversed and utilized against output tax liability,for example

Non reversal of ITC for Motor Vehicle Purchased.Non reversal of tax paid under section 74, 129, 130Non reversal of ITC for Tax paid for Hotel in other State.

OTHER ISSUES IN ITC-REVERSAL

1. Reversal of input tax credit in the case of non-payment ofconsideration

2. Reversal of ITC in respect of inputs or input services and Capitalgoods being partly used for the purposes of business and partly forother purposes, or partly used for effecting taxable suppliesincluding zero rated supplies and partly for effecting exemptsupplies.

3. Reversal in case Taxable supplies become Exempted4. Reversal in case Composition supplier converts under normal

scheme.5. Payment of Tax on unutilized inputs, capital goods in case of closure

of business.

Expenditure on CSR Activities –Whether ITC allowable

Whether ITC is available in case of construction of Toilets under “SwachhBharat Mission” as a part of CSR Activity. Since no immovable propertyshall come into existence which will be capitalised in books on ownaccount, being blocked credit as per Sec 17(5)(d), and only CSR expenseswill be debited in books.

Time of Supply

Time of supply-Issues

Various notifications issued form time to time have prospective effectand advance received in case of goods was liable to tax as mentioned inprevious slide.

Advances received in case of supply of services is taxable and enjoys noexemption as of now.

A registered person shall not be entitled to take input tax credit inrespect of any invoice or debit note for supply of goods or services orboth after the due date of furnishing of the return under section 39 forthe month of September following the end of financial year to whichsuch invoice or invoice relating to such debit note pertains or furnishingof the relevant annual return, whichever is earlier.

Time of supply-IssuesImplications in case of price escalation: In case of Price escalation debitnote has to be raised because of condition mentioned in section 34(3)which says Where a tax invoice has been issued for supply of any goodsor services or both and the taxable value or tax charged in that taxinvoice is found to be less than the taxable value or tax payable inrespect of such supply, the registered person, who has supplied suchgoods or services or both, shall issue to the recipient a debit notecontaining such particulars as may be prescribed.

Advances which are disguised in the name of deposits have to beviewed with Auditors Lens. Time of supply will trigger on acceptance ofsuch deposits.

Special attention is invited in case the supplier is maintaining books oncash basis and recognizes the liability on payment.

Place of Supply

Place of supply- IssuesIn case of merchant traders who procure goods from country “x” andsupplies it to country “y”(on principal to principal basis) withoutbringing them into territory of India is liable to tax normally as interstatesale and POS shall be the country “Y’ where movement terminates fordelivery to the recipient. POS shall be governed by Sec. 10 IGST whichdeals with “Supply of Goods other than supply of goods imported intoor exported from India.

This case is not entitled for refund in case of exports because Exportsmeans “Taking goods out of India to a place outside India”.

Place of supply- Issues2(13) “intermediary” means a broker, an agent or any otherperson, bywhatever name called, who arranges or facilitates the supply of goods orservices or both, or securities, between twoor more persons, but doesnot include a person who supplies such goods or services or both orsecurities on his own account.

An agent of foreign company in India facilitating supply of goods to theIndian buyer and raises invoice on the foreign company, he is receivingpayment in foreign currency but still that will not qualify for export ofservices as there is specific provision in sec. 13(8) which mentions thatPOS shall be the location of supplier of services which is the state ofIntermediary.

Valuation of Supply

Value of supply- Issues

1. In case of FMCG Companies where “Exchange” is very common,valuation is to be done at “Gross Value” and not at “Net Value”

2. Special watch is required in case of prices inclusive of freight butfreight is paid by recipient and adjustments is done in ledgeraccounts by way of journal entry.

3. Valuation in case of “one plus one” and “Buy three get two” offer.Whether credit needs to be reversed or price is inclusive of freesupply.

4. Valuation in case of rule which says supply to be valued as of “likekind and quality”. Whether adidas can be compared to nike, even ifshoe is of like kind and quality where both companies have different“Brand Value”

For More Information Please Contact: CA NIKHIL GUPTA

VINOD KUMAR GUPTA AND ASSOCIATESCHARTERED ACCOUNTANTS

BLOCK No. 31/F/9, SANJAY PLACE , OPP. LIC BUILDINGAGRA-282002Tel: 0562-2522129, Fax: 0562-4010250, Call: 9760025882,

Email: nikhilguptafca@gmail.com, vinodguptafca@gmail.comWebsite : www.vkgandassociates.com