RCM not paid to DRC Challen

[Bayyareddy DK]

Dear Sir,

My client paid voluntarily RCM for the financial year 2020-2021 in the months from April 2021 to Sep 2021 by adding in the Form 3B Return. He did not use DRC-3 Challen. Is he correct or he has to pay again now using DRC-3 challen where he will not get the input tax credit?. Please advice.

[Shilpi Jain]

Credit should not be denied merely for the reason that it was paid through GSTR-3B and not DRC-03. Also there is no restriction on such payment since GSTR-9 itself has a disclosure of these kind of transactions in part v

[Ganeshan Kalyani]

RCM paid thru GSTR-3B is a sufficient compliance. You need not pay again on the same transaction via DRC-03.

[KASTURI SETHI]

I support the views of both experts.

[Amit Agrawal]

What your client has done is precisely what is allowed u/s 39 (9) of the CGST Act, 2017. Given facility is subject to condition that this payment of taxes is not a 'result of scrutiny, audit, inspection or enforcement activity by the tax authorities'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Bayyareddy DK]

Dear Amit Sir,

RCM payment of taxes is not a 'result of scrutiny, audit, inspection or enforcement activity by the tax authorities, but paid Voluntarily during April 21 to Sep 2021 as it is missed during the financial year 2020-2021.

[Amit Agrawal]

Dear Shri Bayyareddy DK,

In given scenario, I am of the view that there is no legal risk to ITC so availed by your client.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Bayyareddy DK]

Dear Sir,

Is it attracts any interest leviable on RCM as it is paid lately but voluntarily but before Sep 2021? Please advice?.

[Amit Agrawal]

Dear Shri Bayyareddy DK Ji,

Said Section 39 (9) reads as follows:

11[Where] any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars 5[in such form and manner as may be perscribed], subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after 12[the thirtieth day of November] following 6[the end of the financial year to which such details pertain], or the actual date of furnishing of relevant annual return, whichever is earlier.

AI Summary

Reverse charge mechanism: GSTR-3B payment valid and preserves input tax credit; duplicate DRC-03 payment unnecessary, interest may apply.
Payment of tax under the reverse charge mechanism through GSTR-3B, when made voluntarily and not due to scrutiny or enforcement, satisfies compliance and preserves input tax credit; a second payment via DRC-03 for the same transaction is unnecessary, but rectification of returns is subject to procedural cut-offs and payment of interest under the Act for late discharge.