Self invoicing under GST

A registered person is liable to pay tax on outward supply by charging tax on the tax invoice and collect the tax from the customer and pay it to the Government. A person who is not registered under Goods and Service Tax Act, 2017 (in short 'GST Act') is not allowed to charge tax on invoice and collect tax from the customer. In order to cover the supplies received from unregistered person in to tax net a mechanism called reverse charge is being introduced in the GST law. This concept was there in the erstwhile tax also. The reverse charge provision is given u/s 9(3) & u/s 9(4) of GST Act.

The list of services on which the person is liable to pay tax u/s 9(3) is given under Notification no. 13/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time. The list of goods on which the person is liable to pay tax u/s 9(3) is given under Notification no. 4/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time. And the list of goods or services or both on which a person is liable to pay tax u/s 9(4) of GST Act is given in the said section itself. Basically section 9(4) wants the registered taxpayer to pay tax on purchase of goods or services from an unregistered person.

Further, the provision under section 31(3)(f) of CGST Act requires a registered person who is liable to pay tax under reverse charge as per both the provisions is also required to issue invoice to himself i.e. self invoice. An option is given to issue a consolidated invoice at the end  of a month for the person who is liable to pay tax under section 9(4). Such facility is not given for supplies covered u/s 9(3) of GST law.

Further, the tax payable under reverse charge as per the provision mentioned above should be paid through cash only and not by input tax credit. The tax paid in cash is reflected in electronic cash ledger. The tax payable under reverse charge is shown in table 3.1, clause (d) i.e. tax payable under inward supplies (liable to reverse charge). Further, to claim the input tax credit of the tax paid under reverse charge is to be shown in table 4(A)(3) i.e. inward supplies liable to reverse charge (other than 1&2 above). The number of invoices for inward supply from unregistered person is required to be furnished in GSTR-1 return in table 13.

Further, the document required to claim input tax credit of the tax paid under reverse charge is self invoice. Thus, raising self invoice is necessary to claim the credit of the tax paid under reverse charge. In case a person did not raise a self invoice and also not furnished such details in the GSTR-1 return then whether he can justify the claim. The answer in my view is yes. The ground for justification is GSTR-3B. As mentioned in above paragraph the liability under reverse charge is required to be disclosed in separate clause in the table and the input tax credit of the tax paid under reverse charge is also to be shown separately in the said return. This will justify the claim.