RCM on Security Services

[Ethirajan Parthasarathy]

An individual is registered under GST. He has engaged the services of security agencies (which is a partnership firm). Their services are used for his residence which is personal expense. I am of the opinion that he is not liable for RCM tax. Please confirm..

[KASTURI SETHI]

Dear Querist,

It is taxable. The supplier of Service is other than body corporate (Partnership) and receiver is a registered person. (A person who is registered under GST is registered for business. He may use security service for residence.That is a separate issue) The condition of "a registered person" stands fulfilled). Rather both conditions stand fulfilled. See Notification No. 29/18 CT(Rate) dated 31.12.18 (effective from 1.1.19) Serial No.14.

[Ganeshan Kalyani]

In my it is taxable under reverse charge.

[DR.MARIAPPAN GOVINDARAJAN]

Liable under reverse charge.

[SHARAD ANADA]

In my view it not taxable on RCM basis. Please refer Sec 9(3) of CGST Act 2017. Sec 9(3) is reproduced here under for your ready reference.

(3) 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.

So, all the provision of the act will apply to recipient and in tax payable in relation to the supply. As per Sec 7(1) (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

Security service at home of registered person is not in the course or furtherance of business but its personal in nature. GST is basically tax on business. The said transaction is personal in nature. In my view GST on RCM will not be applicable.

[KASTURI SETHI]

Registration under GST is not required for personal purpose/consumption. . Registration is for the purpose of business only. If a person is registered with the department for any taxable supply of service or goods and he is receiving security services, he is liable to pay GST under RCM. Registration is the basic condition for applicability of RCM in respect of security service.

[SHARAD ANADA]

Sir, Prior to Deferment of sec 9(4) till 30.09.2018 Sec 9(4) read as under

(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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.

Does it mean that a Registered proprietor purchase from unregistered person items like vegetables, clothes, payment made to house servant etc for his home he has to pay RCM on such supply.

in my view he is not required to pay RCM on such supply. Same logic may also apply for security services as provision of sec 9(3) and 9(4) are similar.

[KASTURI SETHI]

Analogy does not come into picture. Here emphasis is to be laid on the language of notification dated 31.12.18 itself.

AI Summary

Reverse charge on security services: applicability hinges on recipient registration versus business purpose of the supply.
Whether reverse charge applies when a registered person procures security services for personal residential use is contested: one view treats recipient registration and the notification prescribing reverse charge for suppliers other than body corporates as determinative, making the registered recipient liable irrespective of end use; the opposing view maintains that only supplies "in the course or furtherance of business" qualify as taxable supplies and that personal residential security services therefore fall outside reverse charge applicability.