Reverse Charge on import of services from affiliate company

[Yatin Bhopi]

Dear Sir

We have parent company abroad who give us various services like Professional, IPR, management consultancy services etc. The billing cycle is quarterly (we cant shift billing cycle on monthly basis) and they also raise the invoice and we make payment on due date.

Since billing cycle is quarterly we make monthly provision for expenses in the books of accounts. In service tax we used to make payment on provision basis. many times provision was excess as compare to invoice raise by parent company and we used to adjust this excess payment for making payment of service tax subsequently in next month as allowed in rule 6(4A). but under GST there is no self-adjustment allowed and only way to get excess payment is refund.

Since affiliate company is issuing invoice and we also make payment to them and accounting entry for provision for expenses is done as per accounting requirement, Is there any way(since wording in the act is entry in the books)? or can we pay service tax when we make payment to associate company

logic behind making assesses to make payment of entry in the books of account is many times sister concerns are giving various services to each other but not raise invoice or make payment to each other instead they do only book adjustment by passing accounting entries. in our case raising of invoice and making payment is also happening.

Please share your views

AI Summary

Reverse charge on import of related party services: recipient liable and time and value governed by GST Act and Rules.
Reverse charge applies to imports of services from a related person and the recipient must pay tax on reverse charge; time of supply and value of supply are to be determined under the CGST Act and Rules. Rule 47 proviso allows suppliers making taxable supplies between distinct persons to issue invoices before or at the time the supply is recorded or before the quarter's end, which helps align invoicing with monthly accounting provisions and avoid mismatches.