RCM on Cotton purchase

[SHARAD ANADA]

Mr. A is a servent of land owner Mr. B. Land owner Mr. B gives land to servant Mr. A for cultivation of land. Mr. A grows Cotton and gets wages in kind i.e. cetail portion of total Cotton crop.

Registered Taxable person purchase raw cotton from a servant Mr. A. Can the servent Mr. A be considered as agriculturist and GST RCM payable under section 9(3) of CGST Act on such raw cotton purchase.?

AI Summary

Agriculturist status determines reverse charge liability for raw cotton purchases; hired servants ordinarily do not qualify.
Whether GST under the reverse charge mechanism applies on raw cotton purchases turns on whether the unregistered seller qualifies as an agriculturist under Section 2(7) of the CGST Act. The definition focuses on who undertakes cultivation - by own labour, family labour, or servants under personal supervision - and contributors generally conclude a servant working under an employer's supervision will not ordinarily qualify as an agriculturist, whereas the landowner is the likely cultivator. The allocation of burden of proof for exemptions and practical recordkeeping for buyers were also discussed.