Applicability of RCM on ROC Fees and DGFT Fees

[Bhavesh Suthar]

We are a private limited company with turnover of more than 500 Crs. We have applied for TRQ license and paid DGFT fees of Rs. 1 lakh for the application of this license which is renewed every year. Wil the DGFT fees be liable to GST under RCM. Currently, we are discharging GST on ROC fees under RCM. Also what is the difference between Sl. no. 6 & 9 of Notification 12/2017 dated 28.06.2017.

[Padmanathan KV]

In my opinion, it is advisable RCM and take ITC. As i understand, Sl no. 6 exempts Govt services for non-business entity. Sl No. 9 exempts Govt services below Rs. 5000/-. Similarity in both these entries are that, it does not cover:

(a) services by the Department of Posts and the Ministry of Railways (Indian Railways); 

(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; 

(c) transport of goods or passengers; or

[Padmanathan KV]

Please read the first line as "advisable to pay RCM and take ITC"

[KASTURI SETHI]

(i) GST is applicable on DGFT fee under RCM and is to be paid by the recipient (business entity) for receipt of service from Central Govt department (DGFT) provided as public authority. Covered under serial no. 5 of Notification No. 13/17-CT(R) dated 28.6.17 as amended. This transaction/service does not fall under exception clause mentioned in the said Notification and this transaction is also covered in the definition of "business" under Section 2 (17) (i) of CGST Act which extracted below:

"any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities".

(ii) There are various exemptions admissible in terms of Notification No.12/17-CT (R) dated 28.06.17 as amended. See also Serial No.47 (a) of Notification No.12/17-CT (R) dated 28.06.2017.

In case you are not eligible for any of the exemptions provided in the above Notification, DGFT fee is liable to GST under RCM.

[Sadanand Bulbule]

I welcome the replies of both experts. Follow them.

[Shilpi Jain]

There is a small difference - entry 9 does not have "(d) any service, other than services covered under entries (a) to (c) above, provided to business entities." - So the 5k exemption will be applicable to all other services except the ones mentioned specifically in entry 9. 

Though for the a, b and c in entry 6, it looks like it will be covered under 6 and 9.

In case where services fall under more than one entry, the taxpayer is free to chose the entry that is most beneficial for it.

 

[KASTURI SETHI]

Difference

Serial No. 9 contains the factum of continuous supply of service and threshold limit of Rs. 5000/- whereas both are not available at serial no. 6. Hence the difference in both situations. 

AI Summary

Reverse charge on government fees: DGFT and ROC fees liable to GST under RCM unless specific exemptions apply.
Whether DGFT and ROC fees attract GST under the Reverse Charge Mechanism depends on entitlement to exemptions; absent a specific exemption, services supplied by a central government department acting as a public authority are taxable under RCM and the recipient business must pay GST under RCM and may claim input tax credit. Different exemption entries differ in scope: one exempts government services to non business entities, another provides a de minimis exemption for continuous supplies below a monetary threshold and excludes specified service types and business recipients.