Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

XYZ (Proprietor) is supplying motor vehicle to PQR Ltd. for local travel but not charging GST in his invoice. It is not known to PQR whether the motor vehicle is owned by XYZ or he is taking on hire from a third person. It is also not known to PQR whether the third person is charging 5% GST to XYZ. Under the circumstances, whether PQR Ltd. Is liable to pay GST under reverse charge on the amount paid to XYZ?

AI Summary

Does PQR Ltd. Owe GST Under Reverse Charge for Vehicle Supplies by XYZ? Notification No. 22/2019-CT(R) Explored. XYZ, a proprietor, supplies motor vehicles to PQR Ltd. for local travel without charging GST. PQR Ltd. is uncertain if XYZ owns the vehicles or leases them from a third party, and whether GST is being charged to XYZ by this third party. The question is whether PQR Ltd. must pay GST under the reverse charge mechanism (RCM) on payments to XYZ. One response suggests PQR Ltd. is liable under RCM, while another states RCM applies only if specific conditions in Notification No. 22/2019-CT(R) are met; otherwise, forward charge mechanism (FCM) applies.