Question34:

One of our party is engaged in trading of exempt goods namely books. It is having branches all over India. It has taken GST no. because of reverse charge liability arising in head office only (royalty on books etc.)
HO transfer books to branches at 50% discount to MRP and reporting the same as exempt supply in its gst return. From branch no separate gst no has been taken as it is exclusively dealing in supply of exempt goods.
Can we have a option of transfer goods to branch on challan basis without treating as a outward supply and not reporting in GST return.
Even no E-way bill is required to be generated in case of exempt supply.|
The above query has arisen because of the following issue:-
Treating this transfer to branch as a outward supply as 50% dis. is creating a problem in reconciling total turnover for Income tax purposes (as margin of sale from Mumbai on goods transfer from Delhi at 50% on MRP disc. is ultimately sold at 30% on MRP thus diff of 20% as markup)

Answer

In case of Supply of exempted goods you have to issue Bill of Supply as per Rule 49 and not Invoice. So far as Reconciliation of Accounts is concerned you have to prepare a Reconciliation at the end of  the FY. There are number of transaction which are to be deducted from the GST turnover to arrive at the turnover to be shown in Financial Records. These are transfer to branches, Purchase return on invoice, Sale of assets e.t.c. Similarly  purchase will also be reconciled because sale return might be included in your purchase. (Reply dt. 24/4/2018)