Works Contract Service

[Kaustubh Karandikar]

XYZ Ltd. Are registered with GST and are in the business of manufacture of Paint. They will be buying other items such as putty/texture etc from outside market. XYZ had received a contract of painting of residential / commercial buildings. XYZ will be employing an outside painting contractor for the said painting. XYZ will be invoicing to the B2B / B2C as the case may be for this painting work. For invoicing in case of both B2B and B2C, SAC – 9954 (Works Contract Service – Painting Service) Rate – 18%. Is the above correct? In case of B2C contract, can XYZ issue a consolidated invoice at the month end or do they need to raise individual invoices? In either case, can XYZ create a dummy customer by name of “Retail Customer” and invoice to it as individuals have no traceability whatsoever, in terms of GST.

[Ganeshan Kalyani]

Sir, consolidated invoice provision is there in the reverse charge mechanism. But, for forward charge there is no such provision which provides for consolidated invoice.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Ganeshan

[Rajagopalan Ranganathan]

Sir,

According to Section 31 (3) (b) of CGST Act, 2017, "a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed.

According to fourth proviso to rule 46 of CGST Rules, 2017, "Provided also that a registered person[, other than the supplier engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens, may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 subject to the following conditions, namely,-

(a) the recipient is not a registered person; and

(b) the recipient does not require such invoice, and

shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.

Therefore consolidated invoice can be issued only in the above mentioned circumstances.

[Sandeep Garg]

Dear Kaustubh Ji,

SAC Code 995473 is used for the Painting services under GST classification. This service code includes:

· painting services (principally decorative) of building interiors and similar services (e.g., application of coatings, lacquer, etc.);

· painting services of building exteriors (principally for protection);

· painting services of railings, gratings, doors and window frames of buildings, etc;

· painting services of other engineering structures;

· paint removal services

The tax rate applicable on the above code is 18% respectively, as rightly said by you.

As per Rule 46 of the CGST Rules, 2017, the registered person shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies upto the value of rupees two hundred in respect of individual tax invoices. In other cases, where B2C transaction takes place, the recipient doesn’t require tax invoice.

[Sandeep Garg]

Now, regarding your query on issuance of tax invoice on consolidated basis, I would like to state as under:

Section 31 of the CGST Act, 2017 read with Rule 46 of the CGST Rules, 2017, allows a registered person to issue tax invoice having value not more than ₹ 200 on consolidated basis for a day provided the recipient is an unregistered person and he doesn't need copy of tax invoice. So, if above condition is fulfilled in present case, then you may issue consolidated tax invoice but not otherwise.

AI Summary

Consolidated tax invoice allowed for small B2C supplies where recipient is unregistered and declines an invoice. Painting services are classed under the works contract/painting service SAC and attract the specified GST rate. A registered supplier may issue a consolidated tax invoice at the close of each day only where the recipient is an unregistered person, each individual supply meets the low value threshold and the recipient does not require an invoice; otherwise consolidated invoicing is not permitted and standard tax invoice requirements apply.