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Kaustubh Ram Karandikar (Corporate Consultant- Central Excise & Service Tax)     17 August 2021

Place of supply - performance based service

Goods are imported by XYZ, India from foreign buyer PQR . After receiving the goods, it is found that the goods are deficient in terms of its quality. Therefore, XYZ had performed some re – work / repair on it before putting it in to use. The re – work / repair charges were recovered from the foreign supplier PQR by issuing a Debit Note. Is XYZ required to pay GST on it? Sir, in my view, it will fall under Section 13(3)(a) of IGST Act i.e. services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services and accordingly since the repairs is performed in India, XYZ will be liable to pay GST. Please confirm.

 5 Replies

Rajkumar Patel

Rajkumar Patel   17 August 2021

Yes GST is required to pay on such receipt.
Udaya Chandran

Udaya Chandran (Manager - Accounts & Taxation)     17 August 2021

As per my opinion, since there is a deficient in supply, customer debits the supplier for the same.  There is no further supply of services/goods in this case.  Then there is no question of GST applicability.

Rajkumar Patel

Rajkumar Patel   17 August 2021

You are correct but it is also considered as supply of another services for which you received consideration
Udaya Chandran

Udaya Chandran (Manager - Accounts & Taxation)     18 August 2021

As per my opinion, there is no supply made by the XYZ to PQR.  XYZ merely issues debit note for the deficiency of supply already made.  On the other hand, XYZ either get the goods repaired by a third party in local, in this case GST may be paid or if they did it themselves, there is no question of supply.  This is my personal opinion.


99rajendra   18 August 2021

Here we assume that the PQR is domestic supplier, then what ever Debit Note raised, we have to pay GST and has to collect from PQR.
In my view, reimbursement of re-work or repairing charges has to be along with GST, and has to collect from PQR and has to pay to Government.

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