Supply of service is in Karnataka. whether tax payable under IGST or RCM under CGST/SGST.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

A registered person in West Bengal sponsored some masonry labourers to Karnataka for building construction work. He raised an IGST tax invoice. The same was paid through the Bank by the service recipient builder. Supply of service rendered in Karnataka. What is the actual tax liability, SGST /CGST or IGST? Whether the builder in Karnataka is required to pay tax under RCM?

[Sadanand Bulbule]

Dear

In the situaion explained by you, following is the position:

The correct tax liability is IGST, payable by the West Bengal supplier under forward charge.  The Karnataka builder is not liable to pay GST under RCM.  The builder, if registered and eligible, may claim input tax credit (ITC) of IGST paid on such services.

Manpower supply is not notified under Section 9[3] & 9[4] for RCM.

Refer: Section 7[1] and 12[3] of the IGST Act as regards to "Place of Supply".

[Shilpi Jain]

Tax liability is IGST

No liability under RCM. The WB registered person would charge applicable GST

AI Summary

IGST applies to inter state supply of manpower; recipient builder not liable under reverse charge but may claim input tax credit. The supply of masonry labourers from a West Bengal registered supplier to a builder in Karnataka is an inter state supply; the supplier must charge and remit IGST under forward charge, the Karnataka builder is not liable under reverse charge, and the supplier may claim input tax credit of IGST paid. Manpower supply is not notified under the reverse charge provisions and the position follows place of supply principles.