I have seen a case where a company in India has availed services from foreign country every month in a particular year and has not made any payments to the foreign entity. At the end of the financial year, they have passed an entry (writing off because of bad service). The amount is around INR 50 lakhs.
Whether GST has to be paid on import of service under RCM? In this case he has availed the service but has not made payments to the foreign entity. Please help
Is GST under Reverse Charge Mechanism applicable if services aren't paid due to dissatisfaction? Debate continues. A discussion on a forum revolves around whether Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM) is applicable when an Indian company avails services from a foreign entity but doesn't make payments due to unsatisfactory service. The company wrote off the expenses at the financial year's end, totaling INR 50 lakhs. Participants deliberated whether a lack of payment exempts the company from GST liability. Some argued that GST law does not differentiate between good and bad service, suggesting tax must be paid unless the service was completely deficient, while others noted the need for clear contractual terms and potential credit notes to avoid GST liability. (AI Summary)
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