My client is distributor on independence set up box and recharge. Right now they are doing only setup box installation and company claim that such set up box is the property of company and not of customer.
For installing this set up box they are taking 2000/- as security deposit for set up box. They are dispatching set up box on the basis of delivery challan for movement of goods but no invoice is booked on the basis of delivery challan. Company has registered place of distributor as their additional place of business.
We are paying gst only commission part which is derived on the basis of no of installation during the month.
I want to know whether transfer of set up box by company to distributor and distributor to dealer or customer on delivery challan taking 2000/- as security deposit attracts any gst liabilty on the part of either dealer or distributor.
As mentioned in the query, the distributor is engaged in installation of set-up boxes owned by company (on payment of security amount of Rs. 2000/-), but the ownership of such set-up boxes will always remain with the company and not with the customer or distributor, thus it is clear that company is not selling such set-up boxes. The company is only charging security deposit for the same, and GST is not payable on the collection of security deposit from customer as per following provision—
According to Section 2 sub-section (31) of CGST Act 2017, deposit received shall not be considered as payment made for supply of services unless the supplier applies such deposit as a consideration for the said supply.
The distributor is not supposed to charge GST on supply of set-up boxes to end consumers. GST is only applicable on the commission part and installation charges @18%.