Regarding RCM

[Prateek Agrawal]

WHETHER RCM is applicable on LAND DIVERSION FEE PAID TO GOVERNMENT BY THE BUSINESS ENTITY Under Section 9(3) of CGST Act ?

[Rajagopalan Ranganathan]

Sir,

According to Sl. No. 5 of Notification No. 13/2017- Central Tax (Rate) dated 28.6.2017 as amended "Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, -

(1) renting of immovable property, and

(2) services specified below-

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;

gst is payable under RCM by the Business entity who receives such service.

In your case land diversion fee paid by you to the Government is a fee for agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act (vide Sl. No. 5 (e) of Schedule II of CGST Act, 2017). Hence gst is payable by you under RCM.

[DR.MARIAPPAN GOVINDARAJAN]

GST is payable on reverse charge basis as advised by Shri Rajagopalan

[Ganeshan Kalyani]

I am also of the same view.

AI Summary

Reverse charge mechanism applies: land diversion fees paid to government attract GST on government-to-business services.
A land diversion fee paid by a business entity to the government constitutes a fee for agreeing to tolerate or to do an act under Schedule II and therefore qualifies as a government-supplied service to a business entity; GST on such service is payable by the recipient under the reverse charge mechanism.