RCM on Security Services ( Service provider wrongly charged GST in its invoice)

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A company received invoices from a security service provider that incorrectly included GST. The company claimed Input Tax Credit (ITC) on these charges. However, security guard services fall under Reverse Charge Mechanism (RCM), meaning the company, as the recipient, is liable to pay the GST directly. The discussion confirms that the company must book a liability for the period where GST was wrongly charged by the firm, even if the payment was made to the firm. The correct procedure is to pay GST under RCM and then claim the ITC.

CA Sudeep Singh

CA Sudeep Singh (Querist)

26 July 2021 A Security service firm has wrongly charged GST in their invoice and the assessee (Company) took the ITC. Since, Security Guard Service is under RCM and the assessee being a Company has to pay GST under RCM and then may claim the ITC.
For few months Security firm has charged GST in their invoice but later on assessee realized that it is their liability to pay GST under RCM, my question is "Whether company has to book liability in its books for not paying GST under RCM for part of the year?"

Regards
Thanks in Advance!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 July 2021 Yes, liability has to be booked.

CA Altamush Zafar

CA Altamush Zafar (Expert)

26 July 2021 Pay RCM and claim itc

CA Sudeep Singh

CA Sudeep Singh (Querist)

26 July 2021 But for part of the year firm has charged GST in their bill and assessee has paid the bill amount including gst to the firm.
Still assessee has to book liability for the part of the year in which firm has wrongly charged the gst in their invoice?

CA Altamush Zafar

CA Altamush Zafar (Expert)

26 July 2021 Yes you will have to since the liability to pay gst is yours under RCM

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