This is to provide you an important update, wherein we, at RAA & Co. represented a client in a case of interception and detention of goods of value Rs. 1.22 crores. The goods that were intercepted were second hand mobile phones, which were being supplied on the basis of tax invoice (stock transfer) from Telangana to Gurgaon. As per Rule 32(5) of CGST Rules, 2017, value of taxable supply of second-hand goods is the difference between the purchase price and the selling price. As per the facts of present case, the Registered person purchased second hand mobile phones of identical value (Rs. 1.22 crore) and issued tax invoice of identical value (for Rs. 1.22 crore) for stock transfer to its Haryana unit, without any mark up, resulting in Nil differential of purchase price and selling price.
On issuance of detention memo, the Team from RAA & Co. attended the office of Assistant Commissioner, Mobile Squad-2, Agra, and provided detailed submissions.
The issue that was raised by the Department was that tax invoice issued by the Assessee, had entered the complete value, i.e. Rs. 1.22 crore under “Exempt Value”. Hence, it was their averment that the Assessee has contravened the provisions of the CGST Act. As against the averment of the Department, it was submitted by our Team led by Mr. Rajesh Gupta, FCA, and Mr. Gaurav Gupta, Adv. that indication of invoice value under “Exempt value” column is a clerical error caused by inadvertence, and that the invoice being computer generated, there is no scope to punch the invoice value anywhere else. It was also submitted that, in accordance with Rule 32(5) of the CGST Rules, the value of taxable supply is “0”. In this regard, complete documents, including purchase invoice, sale invoice, e-way bills for outward supply and inward supply were provided. It was also explained that the Company had not taken any ITC of inputs of second-hand mobile phones received. From the tax invoice, it is evident that, the Company had duly indicated that it falls under “IGST Margin” scheme, however, mere due to non-mention of Rule 32(5), the Company should not be burdened with 200% Penalty.
After consideration of submissions, the Ld. Assistant Commissioner, Mobile Squad-2, Agra, directed for release of goods.
Comment
The above update is for the benefit of all Assesses, engaged in supply of goods from one place to another, and where e-way bill Rules are applicable. There are many instances where vehicle is intercepted and detained for want of correct information indicated in invoice. Hence, it is important that Accounts/ Tax Team, go through the invoice meticulously and if any discrepancy is found, to remedy it immediately so that there is no cause for alleged contravention of CGST Act.
In this case, merely because there was clerical error that instead of punching value of supply as Invoice value, the Company had punched the said value under head, “Exempt supply”. The same was done, as invoice generation software using which invoices are issued, does not allow both of “taxable value” or “exempt value” to be “0”. This is so, because not many are aware of the GST Margin Scheme, under Rule 32(5) of the CGST Rules.
