30 October 2019
Let's say a fitness club gives membership for 24 months but then shuts down after 8 months. Full fees along with GST was paid at the beginning of membership. Now the club is willing to pay back the partial amount of 16 month fees after deducting 8 months fees. HOWEVER, IT IS NOT REFUNDING THE GST FOR 16 MONTHS. GST WAS CHARGED FOR FULL 24 MONTHS. BUT SERVICE PROVIDED ONLY 8 MONTHS. Is this view correct ?
30 October 2019
In case, the supply of services has been rendered to the registered person and there is a deficiency in supply, the supplier can issue a credit note along with GST. Suppose, your club had to refund amount to the registered person, he could give a refund by issuing a credit note and his GST liability also could have been adjusted.
But in your case , the reduction in an output tax liability of the supplier shall not be permitted as the incidence of tax and interest on such supply has been passed on to any other person. ( club members)
That may be the reason, he is not refunding the GST amount ( As the amount has already paid to the Government )
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