Goods and Services Tax Act (“GST”)
does not define Cross Charge. As per Section 25(4) of Central Goods
and Services Tax Act, 2017 (“CGST”),
where a person has obtained or is required to obtain registration
in a state or union territory in respect of an establishment, has
an establishment in another state or union territory, then such
establishments shall be treated as establishments of distinct
persons for the purpose of this Act. Accordingly, cross charging
refers to invoicing supply of goods or services amongst distinct
persons.
As per Entry 2 of Schedule 1 read with Section 7 of CGST, supply
of goods or services without consideration amongst ‘distinct
person' is liable to be taxed. GST being a destination based
tax, a supply of goods or services amongst the branches of a same
entity located across two different states, comes under the ambit
of tax. In line with the said provisions, every supply between
distinct persons results in cross charge between such entities
