Applicability of gst on margings

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 August 2018 We are in the trade of liquor.We have entered into an agreement with a party who will produce the liquor on our behalf and directly supply to market with following terms:
Selling price given to him is Rs.100
Cost of goods agreed to him to be Rs.90 (fixed)and which we will reimburse to him.
Entire collection of Rs.100 will get collected in our joint bank account.
We will books Rs.100 as sales in our Books but our partner will book sales @Rs.90 if he wish.
Can any one help in understanding the applicability of GST on margin of Rs.10 since prima facia the liquor trade is out of GST regime.

Rajesh Kumar

Rajesh Kumar (Expert)
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23 August 2018 Firstly we need to understand as to whether it is supply of goods or services.
From the points you have stated, it appears that your job worker is supplying alcoholic liquor at the rate of Rs. 90 to you. It is simpliciter supply of goods. As supply of alcoholic liquor do not attract GST, your supplier is not required to pay GST. You are supplying the goods at the rate of Rs. 100. However you are also supplying goods, that is alcohol for human consumption which does not attract GST.
There is no GST on margins.
Please get your agreement vetted by your lawyer for tax implications. State Excise Duty is levied on supply of Alcoholic liquor and different states have different law in this regard.

Querist : Anonymous

Querist : Anonymous (Querist)

24 August 2018 Thanks for your reply.one point still need to be clarified.Our job worker is not supplying to us he is directly supplying to the customers on our behalf @100 and the cost of goods sold agreed to him is @90 which we will pay to him.Now,can he book sales @90 and simultaneously can we also book sales @100 in our books for one dispatch of @100 directly to the customer by job worker.

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