Chargeability of GStT on invoice

[Navid Mukadam]

We would like to send an invoice to a client located in a different state for CMO services received from a local vendor, for which we have already been charged CGST and SGST. Can we charge the client IGST? Is it legal to do so?

[Raam Srinivasan Swaminathan Kalpathi]

Positively legal to charge IGST provided of course there has been flow of services through the local vendor.  

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Sri Kalpthi

[KASTURI SETHI]

Answer is 'yes'.  Will your client be able to take ITC of IGST  ?

[Ganeshan Kalyani]

Yes, you can charge IGST.

[Amit Agrawal]

What do you mean by 'CMO Services'?

[Shilpi Jain]

I too have the question of what is CMO service.

This apart, charging CGST/SGST or IGST does not depend on what is the tax that you paid on your input/input services/capital goods.

It depends on what is the place of supply and what is the location of the supplier.

[KASTURI SETHI]

The term, 'CMO' may be related to marketing services (All types of marketing services including digital etc.). 

[Yash Shah]

Applicability of provisions by supplier would not be dependant on the provisions applicable for persons from whom he is receiving and what is he charging, as per my view - even though when you receive the invoices which may be C+S, however as per the place of supply provisions under section 12, if CMO services fall under the category of Residual, i.e. 12(2) you can very well charge the IGST and along with that bill/invoice to the client.

[Navid Mukadam]

CMO service are basically from a contract manufacturing organization, or CMO, which helps pharmaceutical and biotechnology companies manufacture their innovative drug substances which includes commercial production, drug development, formal stability, formulation development, method development, pre-formulation, and registration batches

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

From the query, it is understood that you received marketing services from a local vendor, CMO (maybe a Chief Marketing Organisation). You receive an invoice from the CMO and pay CGST and SGST.  As a result of the CMO service, you supply goods/services to your client in another state for which you ought to raise a tax invoice for IGST.

So there are two transactions. The tax paid under CGST & SGST is a different transaction and the invoice for IGST is a different transaction. 

If you made supplies to the interstate client through  CMO collecting CGST & SGST from CMO, you cannot raise the tax invoice again for IGST. The CMO has to collect IGST if the CMO makes onward supplies.

This is my opinion according to understanding the query.

AI Summary

Place of supply determines IGST applicability; charge IGST for interstate supplies regardless of input CGST/SGST paid. Charge of IGST on an outward supply is governed by the place of supply and the supplier's role, not by GST paid on inputs. If the respondent makes an interstate supply, the respondent should charge IGST; if the local vendor made the onward interstate supply, the vendor must charge IGST. CGST/SGST paid on locally procured services constitutes a separate transaction and does not determine whether IGST applies to the subsequent interstate supply.