Shree Ganesh Industries Pvt. Ltd., a registered person under GST in the State of Rajasthan (registered office at Jaipur), is a subsidiary of Shree…

13. Computation of minimum net GST payable in cash by Shree Ganesh Industries Pvt. Ltd. for the month of July Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹) GST payable under forward charge Sale of old factory shed [Sale of an old factory shed is treated as neither a supply of goods nor a supply of services in terms of para 5 of Schedule III to the CGST Act, 2017.] 45,00,000 -- -- -- Add: Designing of integrated chip layout for German client [Being a composite supply where principal supply is the digital designing service and testing of prototype samples couriered to India is only an ancillary activity to validate design quality 1 , place of supply is location of the recipient, Germany, in terms of section 13(2) of the IGST Act, 2017. Since supplier is in India, recipient is outside India, place of supply is outside India, payment stipulated in convertible foreign exchange and supplier/ recipient are not merely establishments of a distinct person; it qualifies as 'export of service' under section 2(6) of the IGST Act, 2017. Further, all exports made by Shree Ganesh are through furnishing of LUT without payment of IGST. Thus, no GST is payable.] 22,00,000 -- -- -- Add: Supply of printed corrugated boxes to Punjab customer [Being a composite supply where printed boxes are supplied by the printer using its physical inputs including paper to print the logo supplied by the recipient of goods, predominant supply is supply of goods 2 , thus, GST rate applicable is 5%. Further, it is an inter-State supply of goods since place of supply is location of goods at the time at which movement of goods terminates, in terms of section 10(1)(a), IGST Act, 2017.] 36,72,000 -- -- 1,83,600 Add: Maintenance services to Udaipur Municipal Corporation [Exempt since the value of goods (defunct lights/ spares) involved (40,000, i.e., 22.22% of 1,80,000) does not exceed 25% of the value of the composite supply of maintenance service provided to a local authority by way of a function entrusted to a Municipality under Article 243W of the Constitution.] 1,80,000 -- -- -- Add: Five-seater cars given on hire to RSRTC [Taxable since the exemption for giving motor vehicles on hire to a State Transport Undertaking is available only where the vehicle is meant to carry more than 12 passengers; here seating capacity is only 5. Further, since Shree Ganesh (supplier) is a body corporate, tax is payable under forward charge. It is an intra-State supply as location of supplier and place of supply (being location of recipient) is Rajasthan. 3,00,000 27,000 27,000 -- Add: Business support & marketing services to holding company, Shree Ganesh Global Inc., USA [Qualifies as export of service by Shree Ganesh Industries Pvt. Ltd. to Shree Ganesh Global Inc. since all the conditions of section 2(6) of the IGST Act, 2017 are complied with 3 . Further, all exports made by Shree Ganesh are through furnishing of LUT without payment of IGST. Thus, no GST is payable.] 18,00,000 -- -- -- Add: Consultancy services to own branch office, San Diego, USA [Since supplier and recipient (being an Indian establishment and its own foreign branch) are merely establishments of a distinct person in terms of Explanation 1 to section 8 of the IGST Act, 2017, said supply does not qualify as export of service. The place of supply is outside India being location of recipient [Section 13(2) of the IGST Act, 2017]. However, services supplied by an establishment of a person in India to any establishment of that person outside India, which are treated as establishments of distinct persons in terms of Explanation 1 to section 8 are exempt provided the place of supply of service is outside India. Thus, services provided by Shree Ganesh are exempt from GST.] 15,00,000 -- -- -- Add: Futures derivatives contract [Futures derivative contracts with no delivery option qualify as securities. Securities are neither goods nor services. Thus, given transaction does not qualify as supply.] 20,00,000 -- -- -- Add: High-seas sale of goods to Kavita Print Works [High seas sales is neither treated as supply of goods nor as supply of services in terms of para 8(b) of Schedule III of the CGST Act, 2017.] 12,00,000 -- -- -- Total output tax under forward charge 27,000 27,000 1,83,600 Less: ITC available for set-off (Refer Working Note) [ITC of IGST is utilised for payment of IGST liability and thereafter for payment of CGST and SGST liability.] (27,000) (27,000) (1,83,600) Net GST Nil Nil Nil Add: MRO services on Shree Ganesh's cargo vessel [Tax is payable on import of services under reverse charge.] 8,00,000 -- -- 1,44,000 Add: Raw cotton purchased from Mr. Devraj, an agriculturist [Tax on raw cotton supplied by an agriculturist to any registered person is payable under reverse charge by Shree Ganesh. Being an intra-State supply (since place of supply is Rajasthan being location where movement of goods terminates), rate of tax applicable is CGST and SGST @ 2.5% each.] 7,00,000 17,500 17,500 Add: Imported raw material from Italy [IGST on goods imported is payable by the importer.] 2,00,000 -- -- 36,000 Minimum net GST payable in cash (CGST and SGST of ₹ 17,500 each and IGST of ₹ 1,44,000 will be paid in cash through GSTN portal and IGST of ₹ 36,000 will be paid in cash through ICEGATE portal while making customs clearance.) 17,500 17,500 1,80,000 Working Note – Computation of ITC available for set-off Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹) Computation of ITC credited to Electronic Credit Ledger in July MRO services received on cargo vessel [The place of supply of MRO service in respect of vessels supplied to a person for use in course or furtherance of business is the location of the recipient of service (here, Jaipur, Rajasthan), being a notified services under section 13(13) of the IGST Act, 2017. Since in given case, supplier is located outside India, recipient is located in India and place of supply is in India, said services satisfy all the three conditions of import of services in terms of section 2(11) of IGST Act, 2017. Further, since said services are used exclusively for effecting zero-rated supplies (considered as taxable supplies), full ITC is available on the same and does not require reversal.] 8,00,000 -- -- 1,44,000 Add: Raw cotton purchased [ITC is available as said goods are used in course or furtherance of business.] 7,00,000 17,500 17,500 -- Add: Imported raw material from Italy [Input tax, inter alia, includes IGST charged on import of goods, in terms of section 2(62). No separate levy of IGST will be there on the component of ocean freight paid by the foreign exporter to the foreign shipping line in the CIF contract by virtue of Union of India vs. Mohit Minerals Pvt. Ltd. 2022 (61) G.S.T.L. 257 (SC) since the Indian importer is liable to pay IGST on the 'composite supply', comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract. 2,00,000 -- -- 36,000 Add: Labelling machine purchased [Since machinery is delivered by supplier to M/s Anand Job Works on the direction of Shri Ganesh (Bill To Ship To), it is deemed to have been received by Shree Ganesh and thus, ITC is available. Further, it is an inter-State supply as location of supplier is Gujarat and place of supply is Shree Ganesh's principal place of business, i.e., Jaipur, Rajasthan.] 6,00,000 -- -- 1,08,000 Add: Security personnel services [Since security services are being provided by a body corporate, tax is not payable under reverse charge. Further, since supplier is unregistered, no tax is payable. Consequently, no ITC is available.] -- -- -- Add: Goods imported from Japan sold in high sea [No ITC is available since tax is not payable by Shree Ganesh on the same; in case of high sea sales, IGST is paid by the last high sea sales buyer (Kavita Print Works) who clears the goods for home consumption by filing the bill of entry.] -- -- -- Total ITC credited to the electronic credit ledger in July 17,500 17,500 2,88,000 Less: ITC attributable to input services intended to be used exclusively for effecting taxable supplies [Zero-rated supplies are considered as taxable supplies.] (1,44,000) Common credit 17,500 17,500 1,44,000 Less: Reversal of ITC of inputs & input services attributable to exempt supplies, in terms of rule 42 = (Aggregate value of exempt supplies during the tax period ÷ Total turnover in the State of the registered person during the tax period) x Common Credit (Refer Note below the Table) 7,793 [17,500 x 64,00,000/ 1,43,72,000] 7,793 [17,500 x 64,00,000/ 1,43,72,000] 16,031 [36,000 x 64,00,000/ 1,43,72,000] (Value of labelling machine excluded) Less: Reversal of ITC of capital goods (labelling machine) attributable to exempt supplies under rule 43 = ₹ 1,08,000/60 months x 64,00,000/1,43,72,000 802 ITC of inputs, input services and capital goods attributable to taxable supplies 9,707 9,707 1,27,167 Add: ITC attributable to inputs and input services intended to be used exclusively for effecting taxable supplies -- -- 1,44,000 Add: Opening balance of ITC 45,000 45,000 ITC available for set-off 54,707 54,707 2,71,167 Note: Computation of Aggregate value of exempt supplies and Total turnover in Rajasthan for the month Computation of Aggregate value of exempt supplies Under section 17(3), value of exempt supply excludes transactions specified in Schedule III except paragraph 5 thereof, but expressly includes transactions in securities and, subject to paragraph 5(b) of Schedule II, sale of land and building. Accordingly, aggregate value of exempt supplies is as under: Particulars Amount (₹) Sale of old factory shed [As per explanation to Chapter V of the CGST Rules, the value of exempt supply in respect of land and building is the value adopted for paying stamp duty.] 47,00,000 Maintenance services to Udaipur Municipal Corporation [Exempt from GST.] 1,80,000 Sale of futures contract (transaction in securities) [As per explanation to Chapter V of the CGST Rules, the value of exempt supply in respect of security is 1% of the sale value of such security.] 20,000 Consultancy to own branch, San Diego [Exempt from GST.] 15,00,000 Designing of integrated chip layout for German client [It is a zero-rated supply, hence, is considered as a taxable supply.] -- Business support & marketing services to holding company, Shree Ganesh Global Inc., USA [It is a zero-rated supply, hence, is considered as a taxable supply.] -- High-seas sale of goods to Kavita Print Works [As per section 17(3), 'value of exempt supply' excludes transactions specified in Schedule III, except specified transactions.] -- Aggregate value of exempt supplies for July 64,00,000 Computation of Total turnover in Rajasthan for July Particulars Amount (₹) Sale of factory shed 47,00,000 Export of chip-designing service 22,00,000 Supply of printed corrugated boxes 36,72,000 Maintenance services to Udaipur Municipal Corporation 1,80,000 Cars on hire to RSRTC 3,00,000 Export of business support services 18,00,000 Consultancy to own branch, San Diego 15,00,000 Transaction in securities 20,000 High-seas sale (Not a supply) -- Total turnover in the State (Rajasthan) for the month 1,43,72,000 Note: In above answer, unless otherwise stated specifically, rate of CGST, SGST and IGST applied is 9, 9% and 18% respectively.