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Supplier charged Lower GST rate, Goods and Services Tax - GST, Goods and Services Tax - GST
|Supplier charged Lower GST rate, Goods and Services Tax - GST|
Mr A purchase goods from Mr. B.
Invoiced GST rate of goods is 12% instead of charging 18%.
Who is responsible for paying the differential 6% . Buyer or Supplier
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Liability to pay output tax lies upon the supplier. So, Mr. B is liable to pay differential taxes @ 6%.
Subject to contractual terms & understanding between A & B, B can raise debit-note u/s 34 upon A to recover differential taxes @ 6%.
However, A needs to be aware & vary of the fact that ITC cannot be availed against 'any tax paid in accordance with the provisions of sections 74, 129 and 130' as per Section 17 (5) (i). Please also see Rule 53 (3) of the CGST Rules, 2017 in this regard.
These are ex facie views of mine, the same should not be construed as professional advice / suggestion.
The supplier ('B') is to collect GST from the buyer (A) and deposit into Govt.'s account. Ultimately, differential (6%) is borne by the buyer.
I agree with views of Amit Ji in toto. Mr. B the seller is liable.
Just for academic interest, the jurisprudence in this regard seems to originate from below judgements:
Agreed that the primary liability to the department is of the seller which can be collected from the buyer, also being subject to the contract terms.
There have been decisions which have held that the tax liability can be collected from the buyers as it is an indirect tax.
Thereby, it is always advised that the contract terms are made clear at the inception itself regarding the quantum of tax payable by the buyer.
Some where the interest of the recipient also has to be kept in mind to ensure that the tax component is not kept open, left to be demanded by the seller whenever he gets a demand, more so when he would no longer be eligible to take credit (including scenarios mentioned by Amitji)