Sir, one Not for profit organisation (NPO) NIXI was providing data transfer service to our telecom company and vice versa on chargeable basis.Now, the NPO has declared the tariff as nil. we are not related companies. queries are (1) Is issue of invoice is still possible from both sides as value os service is nil. (2) Is ITC on input/input service received for providing the service internet exchange service, needs to be reversed. (3) Can GST authority object for free mutual supplies we are rendering to each other.
Nice question..From the brief facts, the transaction appears to be a barter / exchange of services (non monetary consideration) , with no monetary consideration from each side. As per Section 15(1) of the CGST Act the transaction value is disregarded in cases where price is not the sole consideration for supply i.e. presence of non monetary consideration.
Now in this backdrop we begin by answering Q. No 3.
3) In light of discussion made supra, prima facie it appears that GST Authority can definitely consider the instant transaction as barter / exchange of services i.e. presence of non monetary consideration for both and make valuation of supply for both as per Sec 15(4) of the CGST Act read with Rule 27 / 30 / 31 of the CGST Rules, 2017.
2) As discussed above, in case transaction is taxable in hands of both by charging GST on value determined by applying the Rules, the ITC reversal would not be required, rather they can avail ITC of GST paid on such transaction.
1) Invoice may be issued of value as determined by applying rules and charging GST thereon. In case invoice have been issued earlier, debit note / credit note for differential amount may be issued as per Sec 34 of the CGST Act, 2017.
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