A request to under-invoice a ceiling fan and split the bill between a firm and a retail customer
You are at the counter of a GST-registered electronics dealer in Bhubaneswar (regular registration, intra-state sales only). A customer buys a ceiling fan with an MRP of ₹2,400, inclusive of all taxes, and a pack of four LED bulbs at ₹450, also inclusive. He wants the fan billed on a tax invoice in the name of his partnership firm, quoting the firm's GSTIN, and the bulbs on an ordinary retail bill. He then asks you to show the fan at ₹1,800 on the invoice and to put the remaining ₹600 as 'fitting charges' on a plain paper slip, saying his accountant has advised this and that it will 'save GST for both of us' - and he wants to pay that ₹600 in cash. Fan HSN 8414, LED bulbs HSN 8539, both at 18%. Your store's GSTIN is displayed at the counter, and the invoice series is computer-generated.
1. Compute the taxable value and the tax break-up for both items. Show every step of the calculation.
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Step 1 - Recognise that the MRP is tax-inclusive. When only the inclusive price is known, the taxable value is back-calculated:
Taxable value = Inclusive price × 100 ÷ (100 + GST rate)
Step 2 - Ceiling fan, ₹2,400 at 18%
- Taxable value = 2,400 × 100 ÷ 118 = ₹2,033.90
- Total GST = 2,400 − 2,033.90 = ₹366.10
- Intra-state (Odisha to Odisha), so it splits equally:
- CGST @ 9% = 2,033.90 × 0.09 = ₹183.05
- SGST @ 9% = 2,033.90 × 0.09 = ₹183.05
- Check: 2,033.90 + 183.05 + 183.05 = ₹2,400.00 ✔
Step 3 - LED bulb pack, ₹450 at 18%
- Taxable value = 450 × 100 ÷ 118 = ₹381.36 (rounded)
- Total GST = 450 − 381.36 = ₹68.64
- CGST @ 9% = ₹34.32
- SGST @ 9% = ₹34.32
- Check: 381.36 + 34.32 + 34.32 = ₹450.00 ✔
Step 4 - Invoice totals
- Firm's tax invoice (fan): taxable ₹2,033.90 + CGST ₹183.05 + SGST ₹183.05 = ₹2,400.00
- Retail bill (bulbs): taxable ₹381.36 + CGST ₹34.32 + SGST ₹34.32 = ₹450.00
Both invoices must show HSN (8414 and 8539), the rate-wise split, and the place of supply as Odisha.
2. How do you respond to the ₹1,800 request and to the two-bill request? Separate what is legitimate from what is not, and say what you would tell the customer.
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The two-bill request is legitimate; the ₹1,800 request is not.
Legitimate - the split: A registered firm buying a fan for business use is entitled to a tax invoice in the firm's name with its GSTIN. A retail customer buying bulbs for personal use gets an ordinary B2C invoice. Two invoices, same counter, same day, both at full value, both with correct HSN and tax - perfectly normal.
Not legitimate - showing ₹1,800 and ₹600 as cash 'fitting charges':
- The fan's value is ₹2,400. Invoicing ₹1,800 understates the taxable value by ₹600, so the output tax shown is short by roughly ₹91.53 (600 × 18 ÷ 118). That is a false invoice, not a discount.
- 'Fitting charges' are only a separate supply if installation is genuinely being provided and charged. Here it is not - the ₹600 is part of the fan's price relabelled. A plain paper slip for a taxable supply is itself a violation; every taxable supply needs an invoice.
- Penalties: issuing an invoice with an incorrect value attracts penalty under GST law, and the customer's firm cannot lawfully claim input tax credit on a suppressed value either. If the firm claims credit on ₹1,800 while paying ₹2,400, the mismatch can surface in the firm's own returns.
- Commercial consequences: the warranty and any insurance claim would be based on an invoice of ₹1,800, and the store's books would not match its stock.
What I would say: "Sir, I can certainly bill the fan to your firm with your GSTIN and the bulbs separately - that is no problem at all and your firm gets the credit on the full amount. What I cannot do is show a lower value or put part of the price on a plain slip. Every rupee we charge has to be on a GST invoice at the actual price. If fitting is actually being done, I can raise a separate invoice for that service at the correct rate, but it has to be a real charge, not part of the fan's price."
Firm, factual, offers the lawful alternative, and does not accuse the customer of anything.
3. List the particulars that the fan's tax invoice must carry, and explain why the customer's GSTIN matters to him.
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Particulars required on the tax invoice
- Supplier's name, address and GSTIN, and the words 'Tax Invoice' - the store's GSTIN is already displayed at the counter and must be printed on the document.
- A consecutive serial number from the computer-generated series, and the date of issue.
- Recipient's name, address and GSTIN - here the partnership firm's, since it is a B2B supply.
- HSN code (8414 for the fan) and description of the goods.
- Quantity and total value.
- Taxable value (₹2,033.90) shown separately from the tax.
- Rate and amount of CGST and SGST separately (₹183.05 each at 9%), or IGST for inter-state - here CGST/SGST, because it is an intra-state supply.
- Place of supply (Odisha) and, where applicable, the delivery address.
- Signature of the supplier or authorised signatory.
Why the GSTIN matters to the customer
- Input tax credit is claimable by the firm only on a valid tax invoice that carries the firm's own GSTIN. A retail bill with no GSTIN is not enough.
- The credit of ₹366.10 is a real cash benefit to the firm - it offsets the firm's own output tax. That is precisely why the under-invoicing request is short-sighted: by suppressing ₹600 of value, the firm would lose the credit on that portion and gain nothing lawful.
- If the firm's GSTIN is wrong or missing, the credit is denied in the firm's return and the mismatch has to be explained later, which costs the firm far more than the tax saved.
The management point: the value of a correct invoice to a business customer is the credit, so accuracy is a selling point, not a burden.