REVERSE CHARGE MECHANISM UNDER GST

[MVK TAXAUDIT]

EARLIER REVERSE CHARGE MECHANISM WAS SUSPENDED TILL SEPTEMBER 2019 LATER , FEW SERVICES WERE LISTED UNDER REVERSE CHARGE MECHANISM. HOWEVER, IN CASE OF GOODS RCM APPLICABILITY IS NOT CLEAR. ADVICE WHETHER RCM IS APPLICABLE OR NOT IN THE FOLLOWING CASES :-

1. WHEN SILK SAREES ARE PURCHASED FROM UNREGISTERED DEALER ?

2. WHEN JOBWORK SUCH AS PROCEESING OF SILK SAREES LIKE DYEING COLOURS TO SILK SAREES, WATER PROOFING THE SAREES FROM UNREGISTERED DEALER?

[KASTURI SETHI]

Section 9(4) of CGST Act has been replaced by GST (Amendment) Act, 2018 w.e.f. 1.2.19. therefore notification granting exemption/deferment till 30.9.19 has become irrelevant after 31.1.19.

1. Silk yarn is under RCM and Silk Saree. See Notification 4/17-CT(Rate).

2. Job work from unregistered person will attract GST @ 18 %.

Also go through the following :

Job work - Scope of Notification No. 11/2017-C.T. (Rate) under Heading 9988

Circular No. 126/45/2019-GST, dated 22-11-2019

AI Summary

Reverse charge mechanism under GST: silk yarn and sarees attract RCM; job work by unregistered persons attracts GST.
Amendment to Section 9(4) removed prior deferments so that prior exemption notifications became inapplicable; consequently silk yarn and silk sarees are subject to reverse charge under the rate notifications, and job work supplied by unregistered persons results in GST liability on the recipient under the notified job-work scope and related circular guidance.