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

Reverse charge on rent: requirement to discharge RCM for business premises rented from unregistered owners following departmental endorsement.
Departmental endorsements direct taxpayers to discharge Reverse Charge Mechanism (RCM) on rent paid to unregistered owners where business is conducted from rented immovable premises, citing amendments that extend reverse charge to immovable property; the notice may omit statutory section references but small drafting errors do not negate the substantive taxability, and applicability depends on whether the taxpayer actually occupies rented premises supplied by an unregistered person.