CBIC Circular Focuses on non-payment of GST by Suppliers

The Central Board of Indirect Taxes and Customs (CBIC) has issued a circular that focuses on the issue of non-payment of Goods and Services Tax (GST) by suppliers. The circular emphasizes the importance of ensuring that the suppliers pay the GST collected from the recipients, and provides guidance on the actions that the recipients of goods or services can take in case of non-payment by the supplier.

The circular states that the recipient of goods or services should ensure that the suppliers pay the GST collected from them to the government. In case of non-payment, the recipient should take certain steps to protect their interests and avoid any potential liability.

The circular provides the following guidance for the recipients of goods or services:

Verify GSTIN and tax liability: The recipient should verify the supplier's Goods and Services Tax Identification Number (GSTIN) and ensure that the supplier is registered under GST. The recipient should also verify the supplier's tax liability and the amount of GST collected from them.

Payment through electronic modes: The recipient should ensure that the payment of GST is made only through electronic modes such as NEFT, RTGS, or any other mode approved by the Reserve Bank of India. The recipient should not make any cash payments to the supplier for GST.

Obtain self-declaration from supplier: The recipient should obtain a self-declaration from the supplier stating that they have paid the GST collected from the recipient to the government.

Verify tax payment by supplier: The recipient should verify the tax payment by the supplier by checking the GSTN portal or by using the GSTN system-based reconciliation tools.

Follow-up with the supplier: The recipient should follow-up with the supplier for the payment of GST in case the tax payment has not been verified.

The circular also advises the recipients of goods or services to take action under Section 16(2) of the Central Goods and Services Tax (CGST) Act, 2017 in case of non-payment of GST by the supplier. The recipient can take the following steps:

Reversal of Input Tax Credit (ITC): The recipient can reverse the ITC availed in respect of the supplies received from the non-compliant supplier.

Initiate recovery proceedings: The recipient can initiate recovery proceedings against the non-compliant supplier to recover the amount of GST not paid by them.

Conclusion

Overall, the circular issued by CBIC emphasizes the importance of ensuring that the suppliers pay the GST collected from the recipients, and provides guidance on the actions that the recipients of goods or services can take in case of non-payment by the supplier.