EXPORT CONSIGNMENT, Goods and Services Tax - GST

[SURYAKANT MITHBAVKAR]

We are manufacturing Pharmaceutical Machinery. We are dealing in Domestic Sales as well as Export. Now, we have to clear export consignment wherein we have to generate EInvoice on 31.03.23 . Please note that material to be cleared without payment of GST (Under LUT). If my shipping bill for this consignment is passed in April-23 and Consignment sent in April-23. In this case can we consider this turnover in our FY 22-23 or FY 23-24 also let us know how this case will reflect in GST.

Posts / Replies

[Amit Agrawal]

Assuming that goods are ready for supply on 31.03.2023, same will be treated as 'supply' of FY 2022-23 for GST purpose (as tax-invoice got raised on 31.03.2023 even though goods are actually dispatched in April, 2023).

But, if goods are not ready for supply on 31.03.2023, in my humble view, you cannot raise tax-Invoice u/r 46 on 31.03.2023.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Padmanathan Kollengode]

Sir, my understanding is as follows:

1. Invoice has to be as per section 31 which reads as follows:

(1) A registered person supplying taxable goods shall, before or at the time of,-

(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(b) delivery of goods or making available thereof to the recipient, in any other case,

issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed:

Therefore, as per GST law invoice can be issued before the removal of goods. Once such sale is made, it has to be shown in the GSTR-1 of March 2023.

In my limited knowledge of AS-9 & IndAS 18, sale is to be recognised when the risk and reward of ownership is transfered. I am extracting relevant portion of AS-9:

6. Sale of Goods 6.1 A key criterion for determining when to recognise revenue from a transaction involving the sale of goods is that the seller has transferred the property in the goods to the buyer for a consideration. The transfer of property in goods, in most cases, results in or coincides with the transfer of significant risks and rewards of ownership to the buyer. However, there may be situations where transfer of property in goods does not coincide with the transfer of significant risks and rewards of ownership. Revenue in such situations is recognised at the time of transfer of significant risks and rewards of ownership to the buyer. Such cases may arise where delivery has been delayed through the fault of either the buyer or the seller and the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault. Further, sometimes the parties may agree that the risk will pass at a time different from the time when ownership passes.

Ind AS 18 is extracted as under:

14 Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:

(a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;

(b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

(c) the amount of revenue can be measured reliably;

(d) it is probable that the economic benefits associated with the transaction will flow to the entity; and

(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Thus, the sale maybe recognised in books only in FY 2023-24 when the actual risk and reward of ownership is transfered.

Thus, there may be reconciliation difference between your GST turnover and turnover as per books.

As ld. Amit Ji suggested, it would be suggested to raise e-invoice in April 2023 to avoid these reconciliation differences.

[Alkesh Jani]

Shri Padmanathan Kollengode Ji,

You have beautifully explained the issue, just add brief about mercantile basis and cash basis and it will be worth desktop saving.

Thanks

[Ganeshan Kalyani]

Generally, the invoice is raised when the customer has agreed to purchase and the supplier has agreed to supply the goods. As a indication of the transaction a documentary proof of supply is issued which is called as Invoice. The dispatch of goods may take place at a later date. In your case you can account the export in the FY 2022-23 itself. However, as stated by Sri Amit Sir, the supply should actually be ready for the dispatch at the time of raising the invoice.

[Shilpi Jain]

In case you have to remove it from your place of business before 31-03-23 the tax invoice for the purposes of GST will have to be prepared and shown as a supply.

If not you can consider it as a sale in Apr '23 both in books and GSTR-1.