Import of service - Payment not made/written off

[Rohit K]

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

AI Summary

Import of service triggers reverse charge liability despite non payment unless supplier concedes non supply or issues credit.
Importation of service ordinarily attracts tax under the reverse charge mechanism where the recipient in India is liable even if payment to the foreign supplier is not made; mere write-off for alleged deficient service does not by itself remove RCM liability unless the foreign supplier concedes non supply or issues a credit note. Contract terms, evidence of deficiency, communications with the supplier, and prescribed timing rules govern whether RCM applies and the importer bears the burden of proof when challenging tax demand.