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GST default

AMIT KAUSHIK (Employee) (52 Points)

26 May 2020

We are a service receiver company and paying service contractors payment with applicable GSTs.

If Contractors not depositing the collected GST amount from us, what will be impact on us (Service receiver company) ?

While return filing what will be the problems can arises? and is their any impact on us ?

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4 Replies

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 26 May 2020

Yes in case if Supplier default in payment of GST on bill raised to Receptient , the credit is not available to Receptient (Refer Section 16 of CGST) .

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Shivam RC (Student) (23683 Points)
Replied 27 May 2020

As per the Provision of Section 16(2) of the CGST Act 2017, Input Tax Credit can be claimed by a person only when the following "FOUR CONDITIONS" are satisfied :

(1). Possession of a Tax Invoice.
(2). Received the Goods or Services.
(3). The Supplier must have paid the Taxes to the Government either in CASH or through utilisation of admissible ITC and,
(4). The Recipient must have filed the Return under Section 39.

Since Your Contractor has violated the 3rd condition ( i.e. not deposited the GST collected from the customer to the Government ) of claiming ITC, therefore you are not eligible to claim ITC.

Regards.

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