Valuation of sale made between related persons

[Rajesh Kumar]

Dear Experts,

As per GST provisions, if ITC is available to recipients , any transaction value is considerable even between related persons.

Please enlight, is there any GST evasion if firm A ( Husband proprietor) issued invoices to firm B ( wife proprietor) when firm B feels lack of ITC or vice versa? Both the firms are registered at same address.

Is transactions between A& B are dubious in nature?

[Ganeshan Kalyani]

If the transaction is genuine then input tax credit is eligible subject to condition under Sec.16 and Sec. 17.

[DR.MARIAPPAN GOVINDARAJAN]

It can be decided only the nature of transactions between the parties are indicated.

[Shilpi Jain]

Invoice to be issued between A and b only when there is any supply. Without supply issue of invoice will not be correct in law.

Also refer Orissa High court decision in the case of JSW

AI Summary

Input tax credit eligibility depends on genuine supply between related persons, with invoices only for actual supply.
Transactions between related persons are taxable under GST where the recipient claims input tax credit, provided the transaction is genuine and statutory credit conditions are met. An invoice is proper only when a lawful supply has occurred; invoices without supply are incorrect. The factual character of dealings determines GST consequences, with judicial authority cited on related-party valuation.