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Cus - Export of non-basmati rice - Notification 20/2023 insofar as it denies the benefit of the transitional arrangement as contained in para-1.05 of the FTP 2023, is bad in law: HCCus - Refund of SAD - 102/2007-Cus - Areca Nut and Supari are one and the same - Objections with regard to name, nature and status of importer or buyers or the end use of goods purchased by them etc. are extraneous: HCCX - Interest on Refund - Since wrong order annexed by petitioner in paper book, Bench is unable to proceed further - Petition is dismissed with liberty to file a fresh one: HCGST - No E-way bill - When petitioner imports machinery and after Customs clearance, transports same to his own factory, it cannot be said that such a transportation would fall within the definition of term 'supply' - Penalty imposable under second limb of s.129(1)(a): HCGST - Fix responsibility on officers who allowed BG to lapse - Petitioner not justified in not renewing BG - Cost of Rs.15 lacs imposed, to be paid to PM Cares Fund: HCGST - Since the parties agree that petition can be disposed of on the basis of records available before Appellate Authority, petitioner is directed to enclose all documents filed before Appellate Authority in a compilation, in form of a paper book: HCWrong RoadST - Whether any service is used for personal consumption or not is certainly question of fact and being question of fact, no substantial question of law arises: HCGovt proposes to amend Geographical Indication of Goods Rules; Draft issued for feedbackST - If what has been paid as tax is without authority of law, Revenue should refund the same - Denial of credit would result in the whole exercise being tax neutral: HCWarehousing Authority notifies several agri goods to be stored in only registered warehousesST - Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the FA, 1994: HCUS FDA okays Eli Lilly Alzheimer’s drugGST - Petitioner challenges jurisdiction of assessing officer - Petitioner is entitled to file an appeal u/s 107 by availing an alternate efficacious remedy: HCFive from Telangana killed in car accident on Pune-Solapur HighwayGST - Existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction: HCHush money case against Donald Trump - Sentencing deferred to Sept 18GST - It is open to a trader to take goods by whichever route he opts, unless the law otherwise requires, destination point being intact: HCDeadly hurricane Beryl smashes properties in JamaicaGST - Conclusion that taxable person is providing a service to supplier while taking the benefit of a discount by facilitating an increase in the volume of sales of such supplier is ex facie erroneous and contrary to the fundamental tenets of GST law: HCIsrael claims 900 militants killed in Rafah since May monthGST - Order expressly records that personal hearing notice was returned with endorsement 'no such person at address' - Since petitioner has shifted to a new premises, it is just and necessary to provide an opportunity to contest demand: HC116 die in stampede at UP ’Satsang’I-T- Application for revision of order dismissed in limine on grounds of delay; case remanded for re-consideration: HCWe are deepening economic ties with India, says US officialI-T- As per Section 119(2)(b), power to condone applications relate to claims for amount exceeding Rs 50 lakhs are to be considered by CBDT; however it is impermissible for CBDT to pass order on merits: HC8 Dutch engineers build world’s longest bicycle - 180 feet, 11 inchesI-T- Additions framed u/s 68 for unexplained income & u/s 69 for unexplained expenditure not tenable where complete transactional details are furnished & not doubted: HCRailways earns Rs 14798 Crore from Freight loading in June monthI-T- Delay in filing ITR is per se insufficient reason to estimate assessee's profit @15% on turnover, more so where audited financial report is filed in timely manner: ITATMoD inks MoU to set up testing facilities in Unmanned Aerial System in TN Defence Industrial CorridorI-T- For invoking section 69A, assessee should be found to be owner of any money, bullion, jewellery or other valuable article & which is not recorded in the books of account: ITATGovt proposes Guidelines for ethical approach to Coal MiningI-T- TDS credit can be allowed based on AIS, where details pertaining to TDS, advance tax & other payments are reflected in Form 26AS: ITATVaishnaw to inaugurate Global IndiaAI Summit 2024I-T- Lending money with the primary intention of earning interest can be considered a business activity, but nature and manner of lending, as well as the frequency, should be taken into account: ITAT
 
Treading GST Path XXVI - Cross border RCM

JULY 28, 2017

By G Natarajan, Advocate, Swamy Associates

M/s ABC & Co is registered under GST in the State of Tamil Nadu. The Managing Partner of M/s ABC & Co travels to Bangalore and stays in an unregistered Hotel at Bangalore. Is M/s ABC & Co liable to pay GST under Reverse Charge? If so what will be the type of GST payable? (For Hotel services, as per Section 12 (3) of the IGST Act, the place of supply is the location of the Hotel, i.e. Karnataka in this case and since the supplier is also in Karnataka, it will be an intra-state supply attracting CGST and Karnataka SGST)

M/s ABC & Co is registered under CGST Act and Tamil Nadu SGST Act but is not having any registration under Karnataka SGST Act.

As per Section 9 (4) of the TN SGST Act, “the State Tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both”. The term “registered person” is also defined in the TNSGST Act, under Section 2 (94) of the Act as any person who is registered under Section 25 of the Act and M/s ABC & Co satisfies this definition.

It may be observed from the above that what is payable under TNSGST Act is the “State Tax”, which is the tax payable under this Act. As per Section 9 (1) of the Act, the said tax is payable on all intra state supplies made in the State of Tamil Nadu. In other words, TN SGST is payable only when the supplier of goods or services or both and the place of supply falls in the State of Tamil Nadu. So, if Ms ABC & Co receives any intra state supply of goods or services or both in the State of Tamil Nadu, attracting TNSGST, from unregistered suppliers in the State of Tamil Nadu, then they would be required to pay TN SGST under reverse charge, under Section 9 (4) of the TN SGST Act.

Karnataka SGST Act also contains a similar provision and Section 9 (4) thereof is also similarly worded. So, if any supplies which are taxable under the Karnataka SGST Act, i.e. any intra-state supply in Karnataka is made by an unregistered person to a registered person, then reverse charge would apply in the hands of the registered person. The term “registered person” is also defined in the Karnataka SGST Act, as a person registered under Section 25 of the said Karnataka SGST Act. As M/s ABC & Co is not registered under Karnataka SGST Act, the provisions of Section 9 (4) of the Karnataka SGST Act is not at all applicable to him. So, it can be concluded that when M/s ABC & Co, which is registered in Tamil Nadu receives any intra-state supply of goods or services or both, in any State where they are not registered there is no liability to pay any SGST under reverse charge. In other words, the reverse charge liability for supplies from unregistered person is only in respect of intra-state supply received in the State, where one is registered.

But, the position under CGST Act is different. Section 9 (4) of CGST Act casts similar obligation on all registered persons and a registered person under CGST Act refer to the person who is registered under section 25 of the CGST Act and M/s ABC & Co being registered under CGST Act, they would be liable to pay CGST under reverse charge, on all intra-state supplies received by them in any State, from unregistered persons.

There would be no liability under IGST Act to pay IGST under reverse charge, as any person who makes an inter-state supply is bound to be registered and not entitled for any threshold exemption. If there are any defiant suppliers, who are not registered despite making inter-state supplies, as per Section 5 (4) of the IGST Act, whenever a registered person receives supplies of goods or services or both from an unregistered person and such supply is an inter-state supply, the recipient is liable to pay IGST under reverse charge.

The CGST / IGST thus paid under reverse charge is entitled for ITC.

To sum up,

S.No.

Situation

Example

1

A person registered in one State receives any intra-state supply in any other State from unregistered persons, where he is not registered there is no need to pay any SGST under reverse charge.

A person registered in one state avails services of Hotel, Restaurant, etc. in a different state, from unregistered suppliers. As per Section 12 (3) of the IGST Act, the place of supply is the location of the hotel / restaurant and hence an intra-state supply.

2
A person registered in one State receives any intra-state supply in any other State from unregistered persons, where he is not registered, he is liable to pay CGST.

3

A person registered in one State receives any inter-state supply from an unregistered supplier in another state – IGST payable under reverse charge.

Receiving services of a CA from outside the State. As per Section 12 (2) of the IGST Act, the place of supply is the recipient's location and location of the supplier is in a different state and hence it is an inter-state supply. It may be noted that the CA in this case is bound to be registered as he is making inter-state supply and the possibility of he not being registered is very remote.

PS. The above views were reconsidered on the basis of certain feedback received. It may be observed from Section 22 of the CGST Act, that registration under the Act is Statewise. Even the registration number of the same person would be different in different State, based on the State Code. So, in the above examples, when the person who is not registered in Karnataka avails the services of a Hotel in Karnataka, since the person is not registered in Karnataka, there would be no CGST / SGST liability under RCM. Thanks for the feedback.

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(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: CGST component

Sir, While discussing the provisions on reverse charge mechanism, it is opined by the learned author that CGST component alone would be payable on hotel services received from unregistered hotel under Section 9(4) of CGST Act, 2017. I wonder how a supply under GST law attracts only one tax component of GST which is conceptually sum total of SGST and CGST. The supply under GST law is either taxed or exempted from GST and I am of the personal view that supply cannot be partially taxed with one component of GST(by imposing CGST alone). It is in this context, I take recourse to the provisions of Section 25 and Section 26 of the CGST Act,2017 which seem to be relevant. Section 25(2) of the CGST Act, 2017 says that a person seeking registration under this Act shall be granted a single registration in a State or Union territory..... Thus perusal of the provisions of Section 25 would make one understand that registration is State specific in a State where business entity is registered whether registered under SGST Act or CGST Act. Further, Section 26 makes it abundantly clear that registration obtained by M/s ABC and Co in Tamil Nadu under TNGST Act,2017 is deemed to be a registration under CGST Act in Tamil Nadu only and the said registration of the company cannot be deemed to be a registration in terms of Section 26 to be a registration in Karnataka State. Therefore M/s ABC & Co is not registered in Karnataka and the provisions of Section 9(4) cannot be made applicable to the company to impose CGST alone going by the reasoning adopted by the author himself for not imposing SGST on hotel services received from unregistered hotel in Bangalore, Karnataka. Personal views expressed on the manner of imposing one tax component only without expressing any view on the tax liability on hotel services discussed.




Posted by rrkothapally rrkothapally
 

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