Reverse charge Sec.9(3) CGST Act'17

[illayyear yanapu]

Dear sir,

As we going through the Sec.9(3) of CGST Act'17, it is stating that The Government may, on the recommendations of the council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Here, recipient means un-registered dealer and/or registered dealer?

Even if such specified supply of goods/services/both provided by the registered person to another register person, is recipient will pay tax on reverse charge basis? If yes, how registered person i.e.(Service Provider) will show there turnover in GST return because tax on such service was paid by recipient.

If all these were borne by the recipient let me know intention of introducing Reverse charge Mechanism.

Thank you,

Illayyear

[Rajagopalan Ranganathan]

Sir,

In this connection please see Notification No. 4/2017- Central Tax (Rate) dated 28.06.2017. As per the table appended to the said Notification the recipient should be a registered person. If the goods are supplied by a registered person to another registered person reverse charge is not applicable except GTA Service. The table is given below: -

S. No.	Tariff item, sub-heading, heading or Chapter	Description of supply of Goods	Supplier of goods	Recipient of supply
(1)	(2)	(3)	(4)	(5)
1.	0801	Cashew nuts, not shelled or peeled	Agriculturist	Any registered person
2.	1404 90 10	Bidi wrapper leaves (tendu)	Agriculturist	Any registered person
3.	2401	Tobacco leaves	Agriculturist	Any registered person
4.	5004 to 5006	Silk yarn	Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn	Any registered person
5.	-	Supply of lottery.	State Government, Union Territory or any local authority	Lottery distributor or selling agent. Explanation.- For the purposes of this entry, lottery distributor or selling agent has the same meaning as assigned to it in clause (c) of Rule 2 of the provisions of sub section 1 of section 11 of the Lotteries (Regulations) Act, 1998 (17 of 1998). Lotteries (Regulation) Rules, 2010, made under the provisions of sub section 1 of section 11 of the Lotteries (Regulations) Act, 1998 (17 of 1998

[illayyear yanapu]

Sir,

If service provided by a recovery agent to banking company is chargeable under reverse charge basis u/s.9(3) of CGST Act'2007. Let me know if recovery agent itself is a registered person still reverse charge applies??

Thank you,

Illayyear

[KASTURI SETHI]

Under RCM in respect of Services notified vide notification No.13/17-CT(Rate) dated 28.6.17, GST is to be paid by the receiver of service irrespective of the fact that both are registered. In your example a banking company or financial institution or a non banking financial company will pay as receiver under RCM.

[KASTURI SETHI]

The issue of supply of service by unregistered person to registered person where registered person is to pay GST is as per Section 9(4) of CGST Act and this is in addition to Notification No. 13/17-CT(Rate) dated 28.6.17

[KASTURI SETHI]

Regarding the manner of accounting turnover in this aspect, Section 2(6) of the CGST Act, provides that value of inward supplies on which tax is payable by a person on reverse charge basis is not to be included in the aggregate turnover of any person supplying goods or or services or both.

AI Summary

Reverse charge mechanism: recipient must pay GST for notified supplies, even when the supplier is registered. Reverse charge requires the recipient to pay tax where government notification so specifies, treating the recipient as liable under the Act. Notifications generally identify the recipient as a registered person and bind the recipient to pay even when the supplier is registered; specific entries list covered goods and services and define supplier/recipient roles. Supplies by unregistered persons to registered recipients can also attract recipient liability under reverse charge. For returns and accounting the value of inward supplies on which the recipient pays tax under reverse charge is excluded from the supplier's aggregate turnover.