THE CHAMBER OF TAX CONSULTANTS

Transcription

1 THE CHAMBER OF TAX CONSULTANTS 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai Tel.: / / office@ctconline.org Website: Indirect tax Study Circle Meeting on 21 st November, 2017 Issues under RCM By- CA Sumit Jhujhunwala Reverse Charge Mechanism Case Studies 1) A contingent liability of Exseed Private Limited became certain in the FY for which they approached, Mr. Agarwal, an Advocate for advise.mr. Agarwal wanted an opinion regarding a few aspects of the case and thus approached Mr. Srivastava, a Senior advocate, for guidance. Exseed Private Limited owed Rs. 1,00,000/- for the services received from Mr. Agarwal (and this included the fee of Rs. 80,000/- for consulting Mr. Srivastava.) According to Exseed Private Limited s Chartered Accountant, only the amount due to Mr. Agarwal should be paid under Reverse Charge Mechanism and not for the amount due to Mr. Srivastava. Keeping the facts of the above case in mind; what would be the treatment according to law w.r.t Reverse Charge Mechanism applicability on fees due to Mr. Agarwal and Mr. Srivastava? 2) M/s Money Chasers Private limited (MCPL) has raised funds through external commercial borrowings (ECB) in July MCPL has remitted 1,,00,000 GBP in September,2017 to M/s Perfect Solicitors in UK for drafting various 1

2 documents and for providing legal consultancy on ECB matters. Out of said fees, 1000 GBP were court fees. The affairs of MCPL are scrutinized by GST Department. They are of the view that legal services by UK Solicitors (including court fees) are deemed to have been provided in India. The Department insists MCPL to pay GST on reverse charge mechanism on above referred remittance of 1,00,000 GBP along with interest. MCPL is seeking your advice in the matter. 3) Whether following services are legal services liable to GST under reverse charge Mechanism in the hands of recipient of Supply? a) Notary charges. b) Fees to advocate for compiling and filing Income tax / GST returns. c) Fees to Chartered Accountant who is also lawyer by qualification for advising on taxation law. d) Fees to Solicitors for documenting property deal for purchase of bungalow by H.U.F. e) Legal fees paid to advocate by Co operative housing society. f) Legal fees paid to advocate by charitable hospital. g) A film star paying fees to advocate for: Defending criminal case against him. Suing film production house for his fees. Technical advice and documentation for property bought / sold. 4) M/s Freight Shipment is a vessel owner based out of London. It has transported a consignment for an Exporter of London and delivered it to Indian Port. The Consignment was transported on Freight Prepaid basis. M/s Shock Ltd. the Indian Importer at the time of clearance of goods from the customs, got the shock of his life when he was informed that he is also liable to pay GST on the prepaid freight. He approaches you for advise about the legality of GST levy on the prepaid freight and whether he is liable to pay GST on such freight under Reverse Charge Mechanism? 2

3 5) Bright Limited, having a Turnover of 18,00,000/- p.a. approached Sunshine Private Limited, in order to obtain Exclusive Booking Rights for the Award Ceremony being hosted in Mumbai on the 25 th of December, For this, Bright Limited has agreed to pay Rs. 1,30,000 to Sunshine Private Limited. Bright Limited is of the opinion that Tax applicable on this is to be paid by the Supplier of Service, i.e. Sunshine Private Limited, as obtaining Exclusive Rights for Booking is not a Sponsorship Service. However, Sunshine Limited contested that the rights are included in the scope of Sponsorship Services and thus Tax needs to be paid by Bright Limited under Reverse Charge Mechanism. What should be the treatment for the following; a) Will the above transaction attract the provision of Reverse Charge Mechanism? b) Bright Limited is not registered under the Goods & Services Act, 2017, as its Turnover is below 20,00,000. Please advise if Bright Limited will have to compulsorily get registered in order to pay the Tax under Reverse Charge. 6) Gujarat Cement Limited (GCL) is having cement manufacturing unit in Bhuj. MrJadeja, a truck owner, transports the cement bags from GCL factory to its dealers in Jamnagar district. Mr. Jadeja charges the freight on the basis of tonnage hauled. Mr. Jadeja does not issue the consignment note. Whether GCL is liable to discharge GST liability under Reverse charge mechanism on freight paid to Mr. Jadeja? 7) Mr. Manish, the owner of Manish Iron Works Limitedengaged in the business of manufacturing Iron, acquires services of transportation of Iron from Maharashtra to Delhi from Cargo Enterprises situated in Delhi. Cargo Enterprises is a Goods Transport Agent and thus the provisions of Reverse Charge Mechanism apply. Kindly advice whether tax would be paid under CGST & SGST since the Recipient is in Maharashtra or would we be liable to pay IGST since the supplier of service is located in another State, i.e. Delhi. 3

4 8) Mr. Xaviers was informed by his Chartered Accountant that for Inward Supplies liable to Reverse Charge Mechanism, the Registered Recipient has to issue Self Invoices for such transactions. Mr. X received services from his Goods Transport Agency (GTA) wherein he is liable to pay Tax under Reverse Charge Mechanism. He wants to know whether he is supposed to issue Self Invoices w.r.t. services from his GTA. If yes, whether consolidated Self Invoice or Individual Self Invoice? 9) Textiles Limited, engaged in the Business of Garments & Textiles, has made a payment of Rs. 1,00,000 to an unregistered person and discharged GST under Reverse Charge Mechanism on 25 th August, 2017 for the month of July, Their Chartered Accountant, Mr. Confused informs Textiles Limited that the Credit for the same can be availed only in the Subsequent Month, i.e. in the month of August, However, while filing the Return, Textiles Limited finds that the GST Portal allows the Taxpayers to take the Input Tax Credit of RCM in the same month itself, i.e. July, In view of the above facts, when should Textiles Ltd avail the Input Tax Credit for the tax paid under Reverse Charge Mechanism, same month or subsequent month? 10) Sangeet Tours & Travels, a Tour Operator, approached JeevanBeema Limited, an Insurance Company, to sell the Overseas Travel policy to his potential clients. Mr. Bharat, the Tax Consultant of Sangeeta Tours & Travels wants to know whether his client would be liable to pay Tax under Reverse Charge Mechanism for the commission received by them from JeevanBeema Limited if Sangeeta Tours & Travels is : a) Registered as Agent under IRDA Act,1938 b) Not Registered as Agent under IRDA Act, ) Mr. Aayush, engaged in the business of publishing Novels, has paidadvance on 3 rd October, 2017 to unregistered printer i.emayur Printing. With RCM on 4

5 Unregistered Dealers being revoked (Notification 38/2017; Central Tax Rateissued on 13/10/2017), how should Mr. Aayushtreatthe advance tax paid in such cases? 5