Can Tax Liability levy on Supplier

ITC / Input 149 views 1 replies
If Receiver of Service paid only the taxable amount to the supplier and not paid the tax, should supplier liable to pay tax? Receiver said to furnish the return after payment of tax, and then they will credit the tax amount to the supplier. But, took ITC in their accounts, and file all respective returns along with annual return. After such incident they paid the the avail ITC Amount on GST DRC 03 as the supplier not shows the tax amount in GSTR 1, but shows the taxable amount. They file DRC 03 along with 24% interest on their GST No., and the interest amount deducted from the supplier on their further service. Now GST Department levy the tax on supplier, but the evidence shows that receiver paid the Tax amount along with interest. Does it correct to levy and collect the tax amount to the supplier, as the supplier not received any tax amount and also lose the interest amount form the receiver ? Please suggest.
Replies (1)
Tax liability arises on the supply of goods or services. It does not link with actual receipt of consideration. Therefore, tax has to be paid even if consideration is received in full or part.

Input tax is linked with payment of value of consideration by the customer to vendor in full (including the tax )within 180 days. if not paid, he has to reverse the credit claimed.

also, if supplier has not paid tax and filed return, the customer cannot avail credit.

In the present case,
1. the supplier has to pay tax and collect from the customer.
2. the customer has to pay supplier and can reclaim the input tax credit reversed in DRC 03 . no time limit to reclaim in such cases i.e., it can be reclaimed even after filling annual return.


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