Reverse Charge under GST.

[SHIVKUMAR SHARMA]

Dear Expert

Service provider & service receiver both are Registered under GST.Service provider is under threshold limit & not charged GST in the Invoice issued by him.Please confirm whether Service receiver is to pay GST under reverse charge.?

[KASTURI SETHI]

No. Not at all.

[KASTURI SETHI]

Service provider is supposed to pay GST from Re. One and take credit.

[DR.MARIAPPAN GOVINDARAJAN]

Since the service provider is registered, even though he is below the threshold limit, he is liable to levy GST and pay the tax since it amounts to voluntary registration. Since the service provider is a registered person, the service receiver is not required to pay tax under reverse charge scheme.

[sadanand pai]

Sir,

My case is that the service provider is not registered and receiver is registered and the registered is paying GST under reverse charge, The receiver though registered , is not doing any activity of supply of Goods/service. Whether any refund from Govt is there for such cases ??

[KASTURI SETHI]

Sh.Sadanand Ji, In the example cited by you, refund is not admissible on account of GST paid by Service Receiver under RCM. Anyhow if refund is paid, the very purpose of RCM will be defeated.

[Ganeshan Kalyani]

Service provider is register , hence he is suppose to charge GST.

[DR.MARIAPPAN GOVINDARAJAN]

If you are not doing any activity then why the transactions had with the service provider?

[KASTURI SETHI]

I am waiting for reply from the querist in respect of counter-query raised by Sh.Mariappan Govindarajan, Sir. If no reply is received, we can presume that initial query was based on imagination.

[Rajagopalan Ranganathan]

Sir,

According to Section 2 (107) of CGST Act, 2017 " “taxable person” means a person who is registered or liable to be registered under section 22 or section 24." According to Section 22 (1) of CGST Act, 2017 " every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees. Therefore ₹ 20 lakhs limit is for the purpose of registration only. There is no notification which exempts supply of goods by a suppler whose turnover is below the limit of ₹ 20 lakhs from payment of gst. Therefore if the supplier of goods/services is not paying gst on the ground that his turnover during previous financial year is below ₹ 20 lakhs and the receiver is registered under CGST Act, then the receiver is bound to pay gst on the supply received from a supplier whose turnover is below ₹ 20 lakhs because the supplier is unregistered. This is my opinion. However the Government should clarify whether above understanding is correct or they have to issue an exemption Notification exempting the supply from payment of gst, made by the supplier whose turnover is below ₹ 20 lakhs.

 

[Ganeshan Kalyani]

Sri Rajagopalan Sir, if service provider is not registered then receiver is liable to discharge the tax under reverse charge. But if he is registered then he cannot take a stand that his turnover is below threshold so he will not charge GST .

AI Summary

Reverse charge liability: registered suppliers must charge GST; unregistered suppliers trigger recipient reverse charge obligation. If a supplier is registered, the supplier must charge and pay GST and the recipient is not liable under reverse charge. If the supplier is unregistered and the recipient is registered, the recipient must pay GST under reverse charge. The registration turnover threshold determines liability to register, not exemption from tax payment, and refunds of GST paid by recipients under reverse charge are not ordinarily admissible.