Reverse charges on international transaction through Corporate Credit card

[AdvMurari Kumar]

Hi,

We hade a transaction with facebook irland in 2017-18 through corporate credit card, Since card bill was in INR so we booked the expenses and make payment against the card.

Now we realized that this was import of service and attract the RCM payable, can you please suggest whether we are liable to pay RCM with interest.

Also since this was related to F.Y. 2017-18 can we claim RCM input now after paying RCM

[Amit Agrawal]

First, the query raised has so many legal facets which are hugely controversial in nature and I am afraid only superior courts will answer them.

Where you are really importer of these services itself is controversial. I am given to understand that DGCEI's view is that 'Facebook, Ireland' or its agent was supposed to get registered in India and pay taxes on the subject transaction.

Without delving upon above-controversy, my personal views are as under (i.e. Presuming that you are indeed importer of taxable service, which is liable to pay taxes under RCM):

1. In my view, your are liable to pay GST under RCM along-with interest as may be applicable.

2. In my view, you will be eligible for avail ITC against self-invoice generated now, while paying taxes under RCM.

In these forum itself, you will find that ITC availability - in these circumstances - is hotly debated & controversial topic. I would suggest you to refer to those discussions as well for your risk analysis and final decision making.

All above are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Please read relevant Para in above-post as under:

Without delving upon above-said larger controversy and presuming that DGCEI's alleged views about 'Fecebook, Ireland's liability' are incorrect, my personal views are as under:

[KASTURI SETHI]

My views

It is import of service and taxable under RCM. There is time limitation for issuance of invoice. Limitation is applicable to self invoice also. ITC cannot be availed now. In case you avail ITC, there is no doubt about issuance of SCN by the department.

[Amit Agrawal]

Please see discussion under Issue Id: - 117652

[AdvMurari Kumar]

Thanks everyone for your suggestion, now I am in view of make payment with interest and not taking input.

AI Summary

Reverse charge mechanism applies to imported services via corporate card, requiring payment of GST with applicable interest. Assuming the corporate card transaction is an import of services taxable under the reverse charge mechanism, the recipient is liable to pay GST under RCM with applicable interest. Claiming input tax credit for RCM paid in a prior year is contested and may be barred by time limits on self invoicing; attempting to avail ITC now risks departmental challenge and a show cause notice.