Question

XYZ(India) is receiving management consultancy services from group / parent companies for the last one year. However, neither the group / parent companies had issued invoice on XYZ till date nor XYZ had paid any amount to group / parent companies due to some disputes. Is XYZ required to pay GST on it under reverse charge even if payment not made to them being the services received from group / parent companies?

Answer

As per Schedule-I of CGST ACT,2017 "Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business" shall be treated as supply even if made without consideration.

A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

In your case XYZ is receiving services from group/parent companies (Distinct person), then it will be treated as supply as per clause b of schdule-I if provided even without consideration.

However reverse charge is not applicable on consultancy services as per Notification No. 13/2017 Central Tax (Rate), but if parent Company is located outside India then you are required to pay tax under reverse charge otherwise liability to pay tax is on supplier of service i.e. Parent company  (Reply dt.12/01/2019)