Recent Notices from State Tax Department Regarding RCM on Rent

[Ramanathan Seshan]

Dear experts,

Lately, we have been receiving notices from the state tax department titled 'Endorsement.' These notices relate to the scrutiny of our GSTR-3B returns. The department has pointed out that RCM liability has not been discharged on rent paid to the landlord, where the landlord is an unregistered person. This is claimed to be in contravention of Notification No. 9/2024-Central Tax (Rate), dated 08-10-2024.
The notice instructs us to:

• Discharge the applicable RCM for the said period within 7 days, and

• Submit proof of payment to the department.

However, the notice does not mention the specific section of the CGST Act under which it has been issued. This raises a few concerns:

• Is such a notice legally valid without citing the relevant legal provisions ?

• What specifically is Endorsement ? 

Regards,

S Ram

AI Summary

Company faces reverse charge mechanism liability on rent paid to unregistered landlords under Notification 9/2024 A company received notices from the state tax department regarding reverse charge mechanism liability on rent paid to unregistered landlords. The department cited contravention of Notification No. 9/2024-Central Tax (Rate) and demanded RCM discharge within seven days. The taxpayer questioned the notice's validity as it lacked specific legal provisions. Tax experts clarified that RCM applies to rent paid for residential dwellings to any person by registered entities since July 2022, with the 2024 notification amending coverage to 'immovable property.' Experts advised compliance over challenging procedural defects, noting that omitting specific sections doesn't invalidate tax liability. The notice may be a general communication requiring response only if applicable circumstances exist.