Tax Charged by Supplier ( Security Services)

[RAMNIRANJAN KANDOI]

Dear Sir,

Security Service provider (Sole Proprietor) is registered under GST and has raised invoice by charging 18% GST. Service provided to a Pvt Ltd Company.

The recipient of the service, paid the total amt including the GST amt to the service provider (Security Service provider)

During audit, objection is raised that recipient of service should have paid RCM and claimed ITC. What is the way out? Is there any favourable case law available?

[KASTURI SETHI]

See TMI ID 759672. 

[Shilpi Jain]

It is a settled principle that once tax is paid by one person then again taxing the same transaction in the hands of another person should not be done.

Take declaration/CA certificate from security agency that it has paid the applicable taxes.

[RAMNIRANJAN KANDOI]

Thanks Both...

AI Summary

Reverse Charge Mechanism: obtain supplier declaration if supplier-paid GST to rebut recipient RCM claims in audit. Whether recipient liability under the Reverse Charge Mechanism arises when a supplier charged and was paid GST on security services; principal rule is that the same transaction should not be taxed twice, and recipient should obtain supplier declaration or CA certificate that supplier paid the applicable GST to rebut audit RCM demands and protect input tax credit.