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

Reverse charge mechanism does not apply to manpower supply; ensure supplier GST registration and preserve ITC eligibility. Manpower supply for loading/unloading is not subject to the reverse charge mechanism; only certain services like security attract reverse charge. Receipt of services from unregistered persons is not an offence and does not create an immediate GST liability for the recipient, but if the supplier later demands GST the recipient cannot claim Input Tax Credit on those invoices. Parties should ensure contractual terms require GST registration and compliance.