Issuing cross charge invoice on net rather than gross basis: DGGI recovers short-paid GST of more than Rs. 72 Crore

Recently Officers of the Directorate General of GST Intelligence (DGGI) officers detected an entity not correctly discharging their GST liability on account of issuing invoices on ‘cross charges’ on the net rather than on a gross basis, thereby short-paying Tax to the tune of more than Rs. 72 Crore. The entire Tax has since been recovered.

What is an Invoice on a Net Basis and an Invoice on a Gross basis?

Issuing an invoice on a net basis would mean an invoice of “Sale-Purchase” when both sale and purchase are done from the same entity. For example, if Branch A makes sales of Rs. 10,000 to Branch B and makes the purchase of Rs. 9000 from Branch B, Ideally Branch A will make a GST invoice of Rs. 10000 and Branch B will make a GST invoice of Rs. 9000 as per cross charge (Invoicing on a gross basis). Here Branch A simply net of Sale and Purchase and made a GST invoice of Rs. 1000.

This information was provided by CBIC Chairman, Mr. Vivek Johri in his newsletter dated 20th March 2023.

He congratulated the Officers for their excellent work.