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Query Relating to RCM

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Arka Roy

Advocate and Tax Consultant

31 Points Posted on 15 February 2021

My client is a dealer of Ultratech company, and he received goods from company warehouse.

When the Cements comes via railway the Dealer has to pay the Freight Charges directly to the Driver/Owner of the Vehicle in Cash on behalf of the Ultratech Company, and such transport is from Ultratech Railway warehouse to Dealer's warehouse.

After the end of the month the company reimbursed the amount to the dealer's bank account directly via Cemco Marketing (marketing Company of Ultratech). on which no invoice has been issued by the Cemco Marketing and No statement found in the Ultratech's monthly Ledger which gives to the party every month.

In this scenaria, what should i do, did i need to pay GST via RCM or just adjusted the Freight Charges Received in Bank to Expences which actually occured. (No extra payment made by company as RCM)

Please Suggest in this regard. Thank You

Replies (12)

Quick Summary

This discussion clarifies a dealer's GST liability concerning freight charges for goods received from Ultratech. Although the dealer initially pays the transport company in cash, Ultratech later reimburses these costs. The consensus is that since Ultratech is ultimately liable for the freight, the dealer does not need to pay GST under the Reverse Charge Mechanism (RCM) or book the freight as an expense. The transaction should be treated as a reimbursement receivable.

CA Altamush Zafar

GST Consultant

15986 Points Posted on 15 February 2021

Check the contract with ultratech. If liability to pay freight is on dealer then rcm will be paid by him else will be paid by ultratech

Arka Roy

Advocate and Tax Consultant

31 Points Posted on 15 February 2021

Sir, ultratech did not pay any gst and I cannot see any amount in 2A, So I think it is my liability, or did I need to pay the tax RCM basis ?

VIKAS SAINI

1167 Points Posted on 15 February 2021

Sir question is very complicated. Will study and confirm to you shortly.

CA Altamush Zafar

GST Consultant

15986 Points Posted on 16 February 2021

You need to see your agreement with ultratech to determine who is liable to pay freight

Arka Roy

Advocate and Tax Consultant

31 Points Posted on 16 February 2021

Actually freight is paid by the authorised dealer in cash to vehicle owner. And after the end of the month the ultratech company reimburse the amount of freight charge without any GST on it. So how can I show it ?