Gross weight and Net weight on Invoice and E way Bill

[Ashwin Bhalakiya]

Dear Sir

I am dealing in Tobacco business. I am purchasing raw tobacco leaves from Trader in Karnataka, and my requirement is at Gujarat. Now my Trader is dispatching Tobacco to my place. My query is as under:

1 On Tax invoice is it required to mention Gross weight and net weight ?. At present it is only net weight they are writing without packing material.

2 On e way bill it is it required to mention Gross weight and net weight ?

3 As per practice raw material rate are fixed per kg, but being agriculture product instead of 1 kg they deliver 1.1 kg, because it include sand, kandi, etc Hence suppose gross weight is 11500 kg but net weight is of 10000 kg .and 500 kg is packing material which is on returnable basis. In this circumstances what to be done,

Experts are required to pl give your opinion what to be done in this circumstances. What is to be done on Tax Invoice and E way Bill. Pl give the legal position also.

Ashwin

[KASTURI SETHI]

Sh.Ashwin Bhalakiya Ji,

1. Net weight is preferable and correct.

2. Weight mentioned on tax invoice and e-way bill must match.

3. Returnable packing should be excluded from the gross weight. The invoice and e-way bill both should bear remarks as 'Packing returnable' .

4.Sand, kandi etc. do not change the character of the goods i.e. tobacco leaves. The status of 'agriculture produce' is not lost if the supplier/manufacturer mentions net weight including sand, kandi etc.

5. Only returnable packing is to be excluded from the gross weight to arrive at net weight.

Q. "As per practice raw material rate are fixed per kg, but being agriculture product instead of 1 kg they deliver 1.1 kg, because it include sand, kandi etc.

A. This is wrong practice. Illegal. Value of sand, kandi etc. should be included in transaction vale for the purpose of payment of tax/duty.

[Ganeshan Kalyani]

Sir, if the packing material is on returnable basis then also its value will be considered as transaction value because of composite supply. Here, in my view supplier can show as reduction to invoice value or fix the price excluding returnable packing material.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Section 15(2)(b) of CGST Act provides that the transaction value includes the amount which the supplier is so liable to pay but it has been paid by the recipient of supply. The buyer or receiver of service can incur expenses such as durable and returnable packing, advertisement expenses, sales promotion expenses etc.

Here we are concerned with the expenses of durable and returnable packing. So it depends upon the nature of contract between the supplier (seller) and the buyer/receiver. The buyer is not incurring such expenses so these are out of scope of Section 15(2)(b) of CGST Act. Returnable packing also involves cost which is required to be borne by the supplier and shall be covered under Section 15 (2)(a) of CGST Act.

Extract of FAQs

Q.No.61 : Whether GST will be leviable in case of returnable packing material like drums supplied with finished goods ?

Ans. GST will be levied on the value charged for the supply only.

My reply is also based on the judgement of Supreme Court pertaining to pre-GST era which are relevant in GST regime also.

AI Summary

Net weight requirement: invoices and e way bills must match, excluding returnable packing and including extraneous matter in transaction value. Net weight is preferable and must be the weight shown on both the tax invoice and the e way bill, which must match; returnable packing is excluded from net weight and should be marked as 'Packing returnable' on both documents. Extraneous matter adhering to agricultural produce does not alter its character and its value must be included in the transaction value; overstating weight to account for such matter is improper. Whether packing costs are included in transaction value depends on contractual allocation and whether the recipient bears expenses; GST applies to the value charged for the supply.