GST RCM ON SERVICE RECEIVED BY TRUST REGISTERED UNDER GST

[SUDHIRKUMAR SHAH]

Trust is registered under the GST as certain activities are taxable. Now Trust receives legal service from advocate. whether this will be taxable service under RCM??

Question arouse in my mind because definition of 'business entity' is not available in GST act, however definition of 'Business' is available. However in notification 12/2017 Business entity definition is there which ultimately attract the definition of 'Business'.

on Analysis of definition of Business, it appears that Trust is also covered..

In Service tax there was specific definition was available of Business Entity, but in GST there is not.

[Alkesh Jani]

Sir,

First of all, the GST Act is supply and destination based, therefore it is necessary to come out of the old mind set of production/manufacture based act.

In GST apart from particular goods or services, particular category of person is also mentioned in the Act. In your case, Section 9(3) which clearly mentions of “….. person liable for ….” The term person is defined in GST Act, and said Section clearly states of specified category of goods or services... and it is worth to note that in this clause instead of ‘registered person’ only ‘person’ is mentioned, which includes Trust, which implies that tax is to be paid by person (registered or not) receives specified goods or services and in this clause even taxable supply is not used, which indicates that specified goods or services (whether taxable or not) liability to pay tax arises. In GST one need to keep in mind terms such as taxable supply, category of supply, consideration etc. while interpreting the statute. Of course, as per the decisions of the courts, statute shall be interpreted so as to harmonize with other statute and not to struck down.

Therefore, I am of the view that Trust is liable to pay tax on RCM basis.

Thanks

AI Summary

Reverse charge applies to trusts receiving legal services, making the recipient trust liable to pay GST under RCM. A trust receiving legal services is liable under the reverse charge mechanism because the GST provision imposes tax liability on a 'person' receiving specified services; 'person' includes trusts, and the clause uses 'person' rather than 'registered person' and does not limit liability to taxable supplies, indicating recipient-based obligation to pay GST for specified services.