Applicability of RCM on services received from unregistered dealer

[Archna Gupta]

Dear Experts,

Please clarify that if there is no minimum threshold limit on Inter state transactions for registration under GST then why there is a provision in Section 5(4) of IGST Act,2017 for liability under reverse charges on the receiver of taxable goods or services or both on inter state transactions if the same is supplied from unregistered dealer, meaning thereby that the supplier is prohibited to make inter state sale of taxable goods or services or both without registration under GST.

Looking forward to your help.

Best Regards

Archna Gupta

AI Summary

Reverse charge mechanism on inter-state receipts from unregistered suppliers raises compliance uncertainty for recipient taxpayers.
The issue is whether recipients must pay GST under the reverse charge mechanism for inter-state taxable supplies received from suppliers unregistered due to turnover thresholds, reflecting a conflict between threshold-based non-registration and Section 5(4) IGST which places RCM liability on recipients; practitioners call for governmental clarification to reconcile threshold exemptions with RCM to avoid undermining small-supplier relief.