𝗘𝗫-𝗪𝗢𝗥𝗞𝗦 (𝗘𝗫𝗪) 𝗦𝗮𝗹𝗲𝘀 𝘂𝗻𝗱𝗲𝗿 𝗚𝗦𝗧

 𝗘𝗫-𝗪𝗢𝗥𝗞𝗦 (𝗘𝗫𝗪) 𝗦𝗮𝗹𝗲𝘀 𝘂𝗻𝗱𝗲𝗿 𝗚𝗦𝗧 – 𝗧𝘄𝗼 𝗖𝗼𝗺𝗺𝗼𝗻 𝗔𝗺𝗯𝗶𝗴𝘂𝗶𝘁𝗶𝗲𝘀 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗲𝗱

Even after eight years of GST implementation the ambiguity related to the compliances of EXWORKS Sales is still unsettled. Few states it was advised by some tax professionals that the Supplier should charge CGST+SGST for ExWorks sales (even though the recipient is in different state) because the title transfer of the goods ends at Suppliers gate. Let us discuss and get clarified the correct procedures. Many businesses follow EX-Works terms, but GST compliance often goes wrong on two key points: 🚚 1️⃣ 𝗪𝗵𝗼 𝘀𝗵𝗼𝘂𝗹𝗱 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗲 𝘁𝗵𝗲 𝗘-𝘄𝗮𝘆 𝗕𝗶𝗹𝗹? ✔ Goods are moved in relation to supply ✔ Hence, E-way Bill is mandatory (if value > ₹50,000) 👉 It can be generated by either the Supplier or Recipient as per Rule 138. In case if both the parties didn't generated the EWayBill then the Transporter can generate EWayBill as per Rule 138(3). ⚠️ EXW contract does NOT eliminate E-way Bill responsibility. Normally one confusion arise here is, if the EWayBill is generated by the recipient then how will the GSTR1 of supplier get Reconciled with EWB data during their GST audits? Answer is simple. Irrespective of whoever generates the EWayBill, the supplier details will be intact and it will be available in the EWayBill report which will get Reconciled with GSTR1 data. Hence it is not an issue. 📍 2️⃣ 𝗜𝗻 𝗘𝘅𝗪𝗼𝗿𝗸𝘀 𝘀𝗮𝗹𝗲𝘀, 𝘄𝗵𝗮𝘁 𝘁𝗮𝘅 𝘁𝗼 𝗯𝗲 𝗰𝗵𝗮𝗿𝗴𝗲𝗱?𝗖𝗚𝗦𝗧+𝗦𝗚𝗦𝗧 𝗼𝗿 𝗜𝗚𝗦𝗧? We need to look into Place of Supply rules to understand this issue. As per Section 10(1)(a) of IGST Act: 📝 Place of supply = location where movement of goods terminates for delivery to a registered recipient So, according to IGST Act the final destination of the goods matters irrespective of the sales terms. ✅ If goods move to another State → IGST applicable ❌ CGST + SGST should NOT be charged merely because delivery is EX-Works 𝘊𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘶𝘢𝘭 𝘵𝘳𝘢𝘯𝘴𝘧𝘦𝘳 𝘰𝘧 𝘵𝘪𝘵𝘭𝘦 𝘢𝘵 𝘧𝘢𝘤𝘵𝘰𝘳𝘺 𝘨𝘢𝘵𝘦 𝘪𝘴 𝘯𝘰𝘵 𝘳𝘦𝘭𝘦𝘷𝘢𝘯𝘵 𝘧𝘰𝘳 𝘎𝘚𝘛. ⚖ 𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 – 𝗧𝗼𝘆𝗼𝘁𝗮 𝗞𝗶𝗿𝗹𝗼𝘀𝗸𝗮𝗿 𝗖𝗮𝘀𝗲 (𝗞𝗮𝗿𝗻𝗮𝘁𝗮𝗸𝗮 𝗛𝗶𝗴𝗵 𝗖𝗼𝘂𝗿𝘁) In case of Toyota Kirloskar the Karnataka High Court held that: ✔ Place of supply is where goods finally reach the buyer ✔ Handing over goods to transporter is NOT “termination of movement” ✔ GST cannot be decided based on EX-Works contract terms ✔ No double taxation (CGST+SGST when IGST already paid) 📢 𝗞𝗲𝘆 𝗠𝗲𝘀𝘀𝗮𝗴𝗲: Keep these above crucial points while deciding your tax compliance to avoid future litigation