Service provider not paid GST details

[Shambhavi Nayak]

One of the client has received service of Fabrication work from a Gujarat GST holder during 25-26.

He has raised invoice for Rs 27 lakhs + IGST @18%.

He has not filled GST returns. Hence we have stopped his payment equal to IGST amount. Can we pay the amount under RCM and take inputs.

 

AI Summary

Input tax credit and reverse charge limits under GST when supplier defaults on return filing and tax payment
Input tax credit under GST may be affected where a recipient withholds the tax component because the supplier has not filed returns or paid tax. Reverse charge mechanism is not attracted merely due to the supplier's default, since it applies only to notified supplies and does not extend to fabrication services supplied by a registered supplier. Withholding IGST may serve as a contractual safeguard, but it does not replace statutory compliance or create a valid RCM payment basis. Non-compliance may expose the recipient to denial or reversal of credit and possible interest consequences.