Unregistered Co purchases from Unregistered & RCM -GST

[Vamsi Krishna]

Dear Sirs

We fall under Exempted category of services being engaged in Agricultural produce. But during our business course we have obtained an opinion from Legal ( Lawyer) which falls under RCM as per GST provisions.

In this case we have are we required to obtain registration to discharge the RCM liability though we are covered under exempted category.

Further if we make purchases from Unregistered persons u/s 9(4), are we required to register and discharge the liability under RCM.

We dont want to go for registration and avail GST credit even.

Can any expert clarify on the above??

Thanks in Advance..

[KASTURI SETHI]

Name of Agriculture Produce ?

[Vamsi Krishna]

Sir

Fruites, Vegetables & Paddy etc.

[KASTURI SETHI]

If the supply of all the goods is exempted from GST (as informed by you), there is no question of applicability of RCM on the basis that it is a supply from unregistered (supplier) to unregistered Receiver (Buyer).

It is to inform you that the supply of all vegetables and fruits are not exempted.

[Vamsi Krishna]

Thanks sir

Shall i take the same stand for Legal services under RCM ( sec.9(3) as well.

[KASTURI SETHI]

That has to be examined. All legal services are neither exempted nor under RCM. There are strings attached to this service.

[KASTURI SETHI]

Yesterday Govt. has clarified that all legal services are under RCM. It is in view of Delhi High Court's observation in writ petition filed Sh.J.K.Mittal, Senior Advocate.

AI Summary

Reverse Charge Mechanism may require registration when receiving non exempt legal services even if buyer claims exemption.
If a recipient's inward supplies are exempt (for example certain agricultural produce), RCM does not arise solely because both supplier and recipient are unregistered; exempt status of the goods negates RCM in that transaction. Legal services, however, are not automatically exempt and must be separately examined: recent government clarification indicates legal services fall within the reverse charge framework in specified circumstances, so registration to discharge RCM depends on whether the particular supply is exempt or expressly covered by reverse charge.