GST - Invoice System

This query is : Resolved

sankar ponnan (Querist)
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15 April 2022 Sir / Mam
I am a trader of truck tyres and doing my business nearly with 7 transporters by the following two nature,
- We are selling the new tyres to the transporters / customers.
- On behalf of our transporters / customers, I get the old tyres from them and send to a Retreading Company for tyre Retreading purpose. Then, that Retreading Company issues service invoice to me with GST.
Here, the 7 transporters are hiring their trucks to a GTA.
So, GTA requests us to issue the invoice on it for selling of tyres to the transporters by us.
Q.No.1 - Can I do it like that under GST?
Q.No.2 – Can I avail the GST on retreading charges and pass on it to my customers?
Q.NO.3- Will the Tyre retreading service come under Job Work? If yes, plz advise me what to do further

Thanks in adv

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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07 July 2024 ### 1. Issuing Invoices to GTA:

**Question:** Can I issue invoices to GTA for selling tyres to the transporters?

**Answer:** Yes, you can issue invoices to the GTA for selling tyres to the transporters. However, you must ensure the following:
- The invoice clearly mentions that the tyres are being sold to the transporters.
- The GST should be charged on the sale of tyres at the applicable rate (which is generally 28% for tyres).
- Proper documentation and record-keeping are maintained to reflect the true nature of the transaction.

### 2. Availing GST on Retreading Charges:

**Question:** Can I avail the GST on retreading charges and pass it on to my customers?

**Answer:** Yes, you can avail of the Input Tax Credit (ITC) on the GST paid for retreading charges, provided:
- The retreading services are used in the course or furtherance of your business.
- You have valid tax invoices issued by the retreading company.

You can pass on the benefit of the ITC to your customers by adjusting it in your pricing. The ITC availed should be reflected in your GSTR-3B return, and the credit should be utilized against your GST liability.

### 3. Tyre Retreading as Job Work:

**Question:** Will the tyre retreading service come under Job Work? If yes, what should be done?

**Answer:** Tyre retreading can be considered as job work under GST if it meets the criteria defined in the GST Act. Job work is defined as any treatment or process undertaken by a person on goods belonging to another registered person.

For tyre retreading to be classified as job work:
- The old tyres (goods) should belong to the transporters/customers (registered persons).
- The process (retreading) is undertaken by the retreading company (job worker).

**Steps to Follow:**
1. **Documentation:** Ensure proper documentation and agreements between you (the principal) and the retreading company (job worker).
2. **Job Work Challan:** Issue a job work challan while sending the tyres for retreading. The job work challan should be in accordance with Rule 45 of the CGST Rules, 2017.
3. **ITC on Job Work:** You (the principal) can avail of the ITC on the job work charges as long as the conditions for availing ITC are met.
4. **Compliance:** Ensure compliance with provisions related to job work, such as filing ITC-04 (quarterly return for job work).

### Example Invoice for Tyre Sale to GTA:

```plaintext
Invoice Number: [Invoice No]
Date: [Date]

Seller Details:
[Your Company Name]
[Your Address]
GSTIN: [Your GSTIN]

Buyer Details:
[GTA's Name]
[GTA's Address]
GSTIN: [GTA's GSTIN]

Description of Goods: Truck Tyres
Quantity: [Number of Tyres]
Rate: [Rate per Tyre]
Total Value: [Total Value]

GST (28%): [GST Amount]

Total Invoice Value: [Total Invoice Amount]

Terms and Conditions:
[Your Terms and Conditions]

Signature
[Your Signature]
```

### Compliance and Record-Keeping:
- Maintain proper records of all transactions.
- Ensure all invoices are compliant with GST regulations.
- File accurate GST returns reflecting all sales and ITC availed.

By following these steps, you can ensure that your business operations are compliant with GST regulations and that you are able to avail and pass on the benefits of ITC on retreading charges.