TaxTMI 
TaxTMI 
TaxTMI 
In this article, author has tried to cover the issues which are generally faced by the assessee. The issues are chosen based on the queries raised in the various seminars delivered by the author.
Query:The Company has received legal consultancy services from an advocate in the month of September, 2017 and received an invoice dated 20th September, 2017. The company has made payment to an advocate on 20th March, 2018. The turnover of the company exceeds 20 lakh.
The company wants to know:
- Whether they are liable for the payment of GST as receiver of service?
- What shall be considered as a point of taxation?
- How it is to be discharged and shown in the return?
Reply:
- As per section 9(3) receiver of service is liable for the payment of GST, if such supplies are specified by way of an issue of notification. In this regards, notification number 13/2017-Central Tax (Rate) has been issued to specify the supplies liable for the payment of GST by receiver of supply wherein, serial number 2 of the notification covers the legal services provided by an advocate or firm of advocate to the business entity.
Hence, as per section 9(3) read with serial number 2 of notification number 13/2017-Central Tax (Rate), company receiving the legal services are liable for the payment of GST as receiver of service.
It is to be noted that the turnover of the company is exceeding 20 lakh. Hence, company is not eligible for the exemption granted under notification number 12/2017-Central Tax (Rate), which provides an exemption under serial number 45 to the business entity having turnover upto 20 lakh and receiving the services from an advocate.
Therefore in the present case, company is liable for the payment of GST as receiver of service.
- Now let us analyse about the time of supply under reverse charge mechanism wherein, company has received the legal services from an advocate or firm of advocate.
As per the GST provisions, under reverse charge mechanism tax is payable when the time of supply takes place. The time of supply for reverse charge payments is earliest of the following:
- The date of payment to the supplier (advance or payment against bill) OR
- 61st day from the date of invoice, if invoice is unpaid till such time OR
- If the transaction is for import of services, with associated enterprise, the date of debit in the books of account.
In view of the provisions in the present case, the time of supply becomes the 61st day from the invoice date. i.e. 20th November, 2017 as it has not been paid prior to that and invoice is dated 20th September, 2017.
c. Now the company has not discharged the GST liability in the month of September, 2017 while filing GSTR 3B. Hence, company shall pay interest on it @ 18% from 21/10/2017 (due date for filing of GSTR 3B) to till the date of filing of GSTR 3B for the month of March 2018. The same shall be shown as liability under reverse charge mechanism while filing GSTR 3B for the month of March 2018 and interest shall also be mentioned in the GSTR 3B.