Tax query: I’m based in Bangalore and supplying goods to a company in Karnataka but shipping to Tamil Nadu. Do I charge SGST/CGST or IGST?

1. Hi. I am a dealer supplying goods with a registered office in Bangalore. ABC Ltd., based in Karnataka, recently made a purchase for Rs.1 lakh and instructed me to ship it to a warehouse in Tamil Nadu. Will I need to raise an invoice charging CGST/SGST or charging IGST?

Answer: This will be a ‘bill to ship to’ transaction case. ‘Bill to ship to’ transactions involve three parties – the supplier, the recipient and the third person. The goods are shipped to the recipient by the supplier on the instructions of a third person. The first part of the transaction will be between the supplier and the third person. The next will be between the third person and the recipient. GST is charged to both recipients depending on their places of business. 

In this situation, you are the supplier, the warehouse in Tamil Nadu is the recipient, and ABC Ltd. is the third person. The first invoice raised by you to ABC Ltd. will need to have state tax (SGST) and central tax (CGST) charged as it is an intra-state supply. The second invoice raised by ABC Ltd. to the company based in Tamil Nadu will have integrated GST (IGST) charged as it is an interstate transaction.

2. Hello. I purchased a house property under construction a couple of years ago, but the project was never completed. The builder has agreed to refund the amount paid to me, excluding the GST portion, as the same has already been paid to the government. Is there a way for me to claim this GST paid? 

Answer: The CBIC recently released a circular detailing the process where a GST refund can be claimed by unregistered persons under two scenarios. One of them includes cases where a construction contract has been cancelled for reasons such as non-completion or delay. In such cases, the buyer may receive a refund from the builder without GST as the same would have already been paid to the government, and the time limit for issuing a credit note would have also expired.

In this case, you can file a refund application on the common GST portal by obtaining a temporary GST registration. You will need to select the same state/Union Territory as the supplier in respect of whose invoices you are filing the refund application. After you log in, go to Services -> Refunds -> Application for Refund. Under refund type, select ‘Refund for Unregistered Taxpayer’. Proceed to fill in the necessary details and upload the relevant documents.

Please note that you will also need to complete the mandatory Aadhaar authentication and provide the bank account details that are in your name and obtained using your PAN.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in