TaxTMI 
TaxTMI 
Service provider not paid GST details
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....ervice provider not paid GST details<br> Query (Issue) Started By: - Shambhavi Nayak Dated:- 7-4-2026 Last Reply Date:- 9-4-2026 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>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 pa....
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....yment equal to IGST amount. Can we pay the amount under RCM and take inputs. Reply By Suresh Yadav: The Reply: NO. RCM payment can only be done for services comes under Section 9(3) of CGST Act read with NOTIFICATION NO. 13/2017-CENTRAL TAX (RATE) dated 28.06.2017 Reply By YAGAY andSUN: The Reply: Subject: Position on Payment Withholding, RCM Applicability, and Input Tax Cre....
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....dit • Factual Background The client has procured fabrication services during FY 2025-26 from a supplier registered in Gujarat, who has issued a tax invoice amounting to Rs. 27,00,000 plus IGST @18%. It is noted that the supplier has failed to file requisite GST returns and discharge the corresponding tax liability. Consequently, the client has withheld payment equivalent to the IG....
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....ST component. • Legal Position on Reverse Charge Mechanism (RCM) Under the GST framework, reverse charge is applicable only in cases specifically notified under Section 9(3) or 9(4) of the CGST Act and corresponding provisions of the IGST Act. Fabrication services, when supplied by a registered supplier, do not fall under notified RCM categories. Accordingly, the recipient is not ....
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....authorized to unilaterally discharge GST liability under RCM merely due to the supplier's non-compliance. • Input Tax Credit (ITC) Implications As per Section 16 of the CGST Act, ITC eligibility is contingent upon, inter alia, the tax being actually paid to the Government. In cases where the supplier fails to deposit tax and does not report the invoice in returns, the recipien....
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....t's entitlement to ITC becomes exposed to denial, reversal, and potential interest liability. The restriction under Section 16(2)(c) is particularly relevant in this context. • Withholding of Payment Withholding of the GST component may be contractually justifiable as a risk mitigation measure; however, such withholding does not substitute statutory compliance. The liability t....
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....o pay tax remains with the supplier, and the recipient cannot regularize the transaction through RCM in absence of a legal provision. • Recommended Course of Action It is advisable to formally communicate with the supplier, requiring immediate filing of returns and payment of tax. Contractual remedies, including withholding or recovery clauses, may be enforced. Additionally, appro....
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....priate indemnities should be secured to safeguard against ITC loss. • Conclusion Payment of tax under RCM in the present case is not legally tenable. Availment of ITC without supplier compliance carries significant litigation risk. The client should prioritize ensuring supplier compliance rather than adopting an alternative tax payment approach not supported by law. Reply By Ra....
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....am Srinivasan Swaminathan Kalpathi: The Reply: Dear Querist Kindly note that by withholding the IGST amount your client is essentially violating provisions contained in second proviso to Section 16(2) of the CGST Act, 2017 which provides as follows: "Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax....
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.... is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be 9[paid by him along with interest payable under section 50], in such manner as may be prescribed" The only option avai....
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....lable to your client is to pay the full amount to the supplier, avail ITC and intimate the jurisdictional Suptt. on the specific facts. Recent 2026 Tripura HC judgments are also in your client's favour - Sahil Enterprises, Malaya Rub-Tech Industries. You may go through the said judgments and accordingly compile a defence of your client's case. There is also a provision in the GST portal....
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.... to communicate with the supplier for non-upload of invoices. This option can also be explored. The basic bedrock of GST enactments mandate the suppliers and recipients to function cohesively and seamlessly. Reply By Shilpi Jain: The Reply: Why would you want to pay under rcm? You don't pay supplier and don't take credit. Reply By Pinnacle Tax Advisor: The Reply: No, you are not li....
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....able to pay GST under RCM on fabrication service. if he has not reported invoice in its return, he is on default. You don't have any loss as you have already hold the payment of GST charged by supplier. If he report the invoice and you avail ITC on or before prescribed timeline i.e. 30th Nov, you can release the payment, else hold the payment<br> Discussion Forum - Knowledge Sharing ....