Refund on RCM paid on Jobwork services

[RAVIKUMAR SATHYAPRIYA]

Hi Professionals, my client had paid RCM for jobwork services and ITC has been availed. can we claim refund on such RCM paid?

[KASTURI SETHI]

Pl. elaborate your query. Full facts are required. Period ? Nature of service ? Constitution of the firm ?

[KASTURI SETHI]

If any tax has been paid wrongly, refund of that amount of tax can be claimed under the category of 'excess payment of tax' under Section 54 (8)(e) of CGST Act but ITC availed has to be reversed first.

[Shilpi Jain]

You may have to reverse ITC and apply for refund. If its a tax not liable refund should be eligible.

Show the tax paid wrongly as a receivable in your books and balance sheet.

[RAVIKUMAR SATHYAPRIYA]

Thanks for Your Reply Sir. Is Jobwork service received by the Registered person from the Unregistered person covered under RCM. Will you please explain this with relevant section or Notification or Circular.

[KASTURI SETHI]

As per Section 143(2) of CGST Act, 'Principal' is responsible for the goods/inputs/semi-finished sent for job work. Principal (owner) is also responsible for payment of tax.

[RAVIKUMAR SATHYAPRIYA]

Thank you Shilpi Jain mam for your reply

AI Summary

Refund of tax paid under reverse charge requires ITC reversal before claiming refund as excess tax payment.
Refund of tax paid under the reverse charge mechanism on jobwork services requires reversal of any input tax credit availed before claiming refund as an excess payment of tax. The wrongly paid tax should be shown as a receivable until ITC is reversed and refund proceedings are initiated. Principal liability for compliance and tax payment in the jobwork context applies where goods/inputs are sent for job work, including when the supplier is unregistered.