GST number not taken by contractor

[KARAN VERMA]

Sir

There are two contractors in my factory for loading/unloading of material and billing amount more than ₹ 50 lacs each.

Both these contractors have not taken GST number and not charge any tax from me, though GST registration limit is ₹ 20 lacs for service providers.

In above case, if both contractors not taken any GST number and not charged tax from me, whether I m liable to pay any tax under reverse charge or is there any liability on me if both contractors not taken any GST number and paid taxes to Govt.

[KASTURI SETHI]

It is a case of manpower supply. It is not under RCM. Only supply of security services is under RCM. One has to be careful while drafting/executing contract/agreement. For more details terms and conditions have to be gone through.

[Himansu Sekhar]

The service received from unregistered persons is not an offence and you are not liable for gst payments. but when they will be demanded gst, they will pay. They may raise invoice to you. At that time you will not be eligible to take ITC ON the strength of such invoices

[Himansu Sekhar]

Before state tax or central tax authorities catch them, insist them to be in tax net and comply with the law. Neither it is a loss to them nor to you.

[KASTURI SETHI]

Right advice and at right juncture (at seral no.3) above by Sh. Himansu Sekhar Ji. If the service supplier has crossed threshold exemption limit and that contractor does not follow Sh.Himanshu Sekhar's advice, he will repent. It is also the moral duty of service receiver to suggest his supplier to follow this advice in his own interest (contractor's )interest.

[Himansu Sekhar]

Thank you sir

[Ganeshan Kalyani]

I agree with the views of all the experts above. GST is such a law where each taxpayer has to comply law and also make others to comply law.

AI Summary

Contractors Exceed GST Threshold Without Registration; Factory Owner Not Liable Under RCM for Unregistered Services A contractor raised concerns about two contractors working at a factory without GST registration, despite their billing exceeding the GST threshold of 20 lakhs. The forum discussed whether the factory owner is liable for tax under reverse charge mechanism (RCM). Responses clarified that manpower supply is not under RCM and that services from unregistered persons do not impose GST liability on the recipient. It was advised that the contractors should register for GST to comply with the law, and the factory owner should encourage them to do so for their own benefit.