Reverse Charge

[ROHIT GOEL]

Whether reverse Charge u/s 9(3) is made applicable w.e.f. 1-10-2019 or it is kept pending by some notification?

[KASTURI SETHI]

Section 9(4) of CGST Act was deferred till 30.9.19 vide Notification No.22/18-CT(Rate) dated 6.8.18. Now Section 9(4) stands amended (substituted) w.e.f. 1.2.19 by S .4 of the CGST (Amendment) Act, 2018 (31 of 2018). So the general provision of RCM levy on supplies from unregistered persons has been replaced with authorizing the Govt. to notify class of registered persons who shall only pay GST under RCM in respect of supply of specified categories of goods or services or both received from an unregistered supplier.

Example

By virtue of above amendment of Section 9(4), Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975). has brought under RCM vide Notification No.24/19-CT(R) dated 30.9.19.

After amendment, Section 9(4) regarding purchases from unregistered dealer stands no more deferred now..

[Ganeshan Kalyani]

The RCM u/s 9(3) is in force since from the beginning I.e. 01.07.2017.

AI Summary

Reverse Charge Mechanism remains operative and section now permits government to notify registered persons for RCM on specified supplies. The Reverse Charge Mechanism requires notified recipients to pay tax on inward supplies; the RCM levy under section 9(3) has been operative since GST commencement. The statutory amendment replaced a general levy for supplies from unregistered suppliers with a power for the government to notify classes of registered persons who will pay RCM on specified goods or services received from unregistered suppliers, exemplified by cement being brought under RCM by notification.