QUESTION

Mr. A is registered with GST and an Exporter. For exportation of his goods he hired Mr. Y (CHA) for entire clearance formalities including arrangement of freight. Mr. Y pays freight charges and all other incidental charges on behalf of him and reimbursing it from him with attachments of tax invoices of various sub-agents. Even if payment is made to sub-agents by Mr. Y (CHA), the name of service recipient, Address & GSTIN etc. mentioned in their tax invoice is of him. Can he avail ITC on the strength of Tax invoices of sub agents along with Reimbursement bill of CHA?

ANSWER

Facts of the case:

Mr. A is registered with GST and an Exporter. For exportation of goods he hired Mr. Y (CHA) for entire clearance formalities including arrangement of freight. Mr. Y pays freight charges and all other incidental charges on behalf of Mr. A and reimbursing it from Mr. A with attachments of tax invoices of various sub-agents. Even if payment is made to sub-agents by Mr. Y (CHA), the name of service recipient, Address & GSTIN etc. mentioned in their tax invoice is of Mr. A. In this scenario can he avail ITC on the strength of Tax invoices of sub agents along with Reimbursement bill of CHA?

Law Applicable:

Rule 33 of CGST Rules, 2017 read with Section 15 OF CGST Act, 2017

Interpretation:

There can be two modules for dealing with CHA.

Module 1-
The CHA is arranging various services and making payment of it. The invoice by the service provider is raised in favour of CHA and the CHA issue invoice for the total services.

Module 2-
The CHA issues invoice for his services only and all the service providers issue invoice to the party. The CHA makes payments to service providers and collects it from the party.

VALUE

Case 1- In case (1), the CHA will charge GST on the total amount of services.

Case 2- CHA will charge GST only on service amount and the rest of the amount will be collected as a pure agent. (Reply dt. 27/11/2021)