Facilitator not remitted GST collected from the company. Whether company is liable in any manner ?

[Ramesh babu]

1. I have a company client who is getting (NEEM trainees- manpower) from a facilitator. We are getting facilitator monthly bills include GST and we released payment for their full invoice as it is.

2. Now my account team says that NEEM facilitator is not remitted GST from February 2019 onwards.

Now my quiery

1. Whether we are liable for NEEM facilitator non remittance of GST as the same is already released from my end to facilitator?

2. If i have already taken the credit of GST in the facilitator bills in March, April etc .to July-19 because i have paid bill payment to facilitator. Non payment of GST by facilitator give any legal trouble for my input credit i have already taken.

3. In what section, Rule protect buyer from taking input credit GST.

Kindly advice, please.

[Ashwini Seeram]

Dear Sir,

1. The responsibility of remitting GST to the govt lies with the service provider and not with the recipient, unless the service is mentioned in Reverse Charge Mechanism (RCM) list as per section 9(3) of CGST Act. Manpower supply does not fall under the list of services which attract the provisions of RCM. Since you are the service recipient, there would be no liability to remit the tax with the govt, it is responsibility of NEEM facilitator.

2. As per section 16(c) of the CGST Act, 2017 the amount of tax charged shall be actually paid to the government. Taking this as a ground, the ITC availed might be denied by the department, but this can be litigated.

3. Please refer section 16 of CGST Act, 2017

[Ramesh babu]

Thank you very much sir

[KASTURI SETHI]

Dear Querist,

What I understand NEEM stands for National Employability Enhancement Mission. It falls under the Ministry of HRD, Govt.of India.

(1) Service provided by Business Facilitator (in short, 'BF') to a Banking Company has been brought under RCM vide Notification No. 29/2018-C.T. (Rate), dated 31-12-2018 effective from 1.1.19. In this notification, Service provided by Security Agency (not Manpower supply) has also been brought under RCM. In both the situations, GST is to be paid by the Service Recipient and NOT by Service Provider. But this notification is not applicable to NEEM as NEEM is neither receiving security services nor NEEM is a banking company. NEEM is receiving Manpower supply from BF. Service provided by BF to a Banking Company are under RCM. Thus in the scenario explained by you Service Provider (BF) is to pay GST after collecting from NEEM. It is a statutory duty of BF to discharge GST liability. BF is to deposit GST so collected with Central Govt. and NEEM is not responsible.

2. NEEM cannot be held responsible for non-payment of tax by BF. It is brought to your notice that as per Section 155 of CGST Act, the burden of proof is cast upon the person (who avails ITC) to ensure that tax has been paid by the supplier of service i.e.BF. So it is better for NEEM to persuade the BF to deposit GST otherwise ITC availed by NEEM will be disallowed by the department (Common Portal System will not allow) and will be recovered along with interest and penalty.

3. I agree with the reply posted by Sh.Ashwini Seeram.

If you have any doubt, you may post your further query here in this forum.

[Ramesh babu]

Thank you very much sir

AI Summary

Input tax credit conditions: recipient risks denial of ITC if supplier fails to remit GST despite invoice payment.
The supplier (facilitator) bears the primary obligation to remit GST collected; recipient liability arises only if the supply falls under the Reverse Charge Mechanism. Payment of invoices including GST by the recipient does not shift the remittance duty. However, for entitlement to Input Tax Credit, the tax must actually have been paid to the government; failure by the supplier to deposit tax can lead to denial of ITC, recovery with interest and penalty, and places the evidentiary burden on the recipient to demonstrate payment.