EXAMPLE-109

M/s. ABC Ltd of Delhi has taken consulting services from XYZ advisors Pvt. Ltd in Faridabad for the month of August, value of such service is of Rs. 10000. Company issued invoice for the said services on 5^th September.  Integrated tax of amount Rs 1800 is charged on the invoice. XYZ advisors Pvt. Ltd showed services in the detail of outward supply in the return for the month of September. M/s ABC also claimed Input tax credit  of Rs 1800 on the said services in the month of September on the basis on invoice.  Whereas recipient does not make payment of value of such supply and tax due on such supply up to 4^th march.

What consequence the company has to face for non-payment of value and tax due on services under the provision of GST.

Answer

The recipient can take credit on input on the basis of invoice. As per second proviso to section 16(2), he is required to pay the consideration along with tax within 180 days from date of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis.where a recipient fails to pay to the supplier of goods or services, the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in the manner as may be prescribed.

ITC rule 37  (Reversal of input tax credit in the case of non-payment of consideration )- has prescribed that such recipient shall furnish the details of such supply and the amount of ITC availed of in GSTR-2  in the month following the period of 180 days from the date of issue of invoice and the amount of ITC shall be added in output tax liability in that month. Such person is liable to pay interest as per section 50 on his own from the date of availing credit till the date when the amount added to the OTL is paid.

   As in the example M/s ABC has not paid value and tax with in 180 days as 180th day is 4^th march. As per above rule required to furnish detail in the of march and Rs 1800 + interest u/s 50 shall be added to the OTL in month of march.

Interest shall be levied @ specified by Govt for the period of September till the paid tax shown in OTL.