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Time of supply on deffered Royalty payments
In one cement company books of accounts. They were entered an agreement to the government and obtained royalty differment. Agreement entered in pre- GST period. As per the agreement, dealer is liable for payment of royalty wef 01.06.2021. However, they undertook mining activities since 2015. They didn't even pay single penny to government being that they were under differment scheme..Now my query is, does the tax payer liable to pay RCM ?? What is time of supply ..2015 or 2021??
Replies (1)
The mining company is liable to pay GST under the Reverse Charge Mechanism (RCM). The Time of Supply is determined by the earlier of the date the payment is entered in the books or the date the payment is debited from the bank account. Because the service of mining is considered a continuous supply of services (or a right to use), tax liability is triggered at the time of payment for those services. It is advisable to review the specific terms of the "deferment scheme" and ensure all payments are accounted for in the relevant GSTR-3B filings to avoid penalties.
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