reverse charge import of services
Query (Issue) Started By: – Madhavan iyengar Dated:- 6-1-2019 Last Reply Date:- 7-1-2019 Goods and Services Tax – GST
Got 8 Replies
GST
A Company based X in India has imported services from its related party B in Germany, X has discharged IGST on RCM basis based on invoice of ₹ 100000/- ( converted value) issued by B and claimed ITC of say ₹ 18000
Issue: After 4 months B issues a credit note to A reducing the earlier invoice amount.by rs. 50000/-
Is A required to reverse the ITC of IGST taken earlier in proportion to reduction in value of the invoice – ie is IGST reversal of rs. 9000 to be done by A
If no then reasons for same
Reply By Spudarjunan S:
The Reply:
Dear Sir,
No Need to reverse the same. Reasons for the same is provided below:-
The recipient of a supply has to reverse his Input tax credit if his supplier issues him a TAX CREDIT NOTE under section 34 of CGST Act, 2017. Credit notes can be a Tax Credit note o
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ication ??
or in the books you reduce your purchase value in this case it is services received
but what happens in case of goods if it is a local sale and financial credit note issued by supplier and the differential amount is booked as income ??? is gst to be discharged.
Reply By Spudarjunan S:
The Reply:
In case of financial credit notes in domestic supplies, the query of non-payment of consideration arises. However the same financial credit note can be treated as payment of consideration through book adjustments. so no need to reverse the ITC in relation to such financial credit note. There are CESTATdecisions in Service Tax regime supporting the same
Reply By Madhavan iyengar:
The Reply:
thanks
in case of services there is a challenge if we look at sec 16 which talks about conditions for taking credit- if credit note is issued for deficient supply of services for a certain amount then to that extent can it be inferred that some part of services are not received hence rever
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e discount is not includible in taxable value. However you should be in a position to substantiate with documentation that the financial credit note has been issued for discount for taking this stand.
If the credit note has to been issued for doing anything or achieving anything which is been agreed between the supplier and the recipient the department may take a stand that such credit note is consideration for supply of services as per Schedule II – Sl.no.5(e) of CGST Act, 2017.
Reply By Madhavan iyengar:
The Reply:
thanks
but pls see below points in light of section 16 for receipt of goods/services
in case of services there is a challenge if we look at sec 16 which talks about conditions for taking credit- if credit note is issued for deficient supply of services for a certain amount then to that extent can it be inferred that some part of services are not received hence reversal will trigger
i am only referring to cases in which credit note is given with out gst impact but the
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