Distribution of expenses and credit under GST

[Rajat Gupta]

Company X is engaged in selling goods through ECOs (Amazon at present). It has a head office (HO) in Bengaluru and multiple godowns in different states. There is no specific branch office in any other state. All godowns are maintained in the premises of Amazon only.

All the inward invoices like consultancy, legal fees, advertisement, etc. are received by the HO. My query is, can the HO choose not to allocate these charges to other branches, or is it mandatory to allocate/distribute these charges and ITC on them to the other branches?

[Shilpi Jain]

Further clarity required regarding GSTIN at other States, billing to customers done from where?

[Rajat Gupta]

Billing for all other GSTINs is done directly at the ECOMs website. So, if the goods are dispatched from the Maharashtra godown, Amazon issues an invoice from the Maharashtra GSTIN.

[Sadanand Bulbule]

Where common input service invoices (e.g., consultancy, legal, advertisement) are received at the HO but relate to multiple GST registrations (distinct persons), the law mandates distribution of such ITC through the Input Service Distributor (ISD) mechanism, and the HO cannot unilaterally retain the entire credit.

So double check who are all the beneficiaries of such common input services.

AI Summary

Input Service Distribution must allocate ITC from common services to all benefiting GST registrations via ISD. When common input services procured by a head office benefit multiple distinct GST registrations, the Input Service Distributor mechanism must be used to allocate input tax credit; the head office cannot retain full credit. Where e commerce invoicing issues supplies from the dispatching godown's GSTIN, those GST registrations are the beneficiaries and must be included in the ISD distribution by mapping service invoices to the benefiting registrations.