Question:
GTA (Goods transport agency) supplies its services to an unregistered entity under GST, How would the tax liability would be discharged since GTA is covered under sec 9(3) and might opt for exemption from registration?
Suggested approach:
Sec 9(3) " The Government may, on the recommendations of the Council, by notification,
specify categories of supply of goods or services or both, the tax on which shall be paid on
reverse charge basis by the recipient of such goods or services or both 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"
Sec. 31 (3) (f) "a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both "
Sec 2(6) “aggregate turnover” means the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis), exempt supplies, exports of goods or services or both and inter-State
supplies of persons having the same Permanent Account Number, to be computed on all
India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Hence following summary can be drawn after reading/ referring such cases -
1- The requirements mentioned in sec 9(3) is applicable on registered person as per the reference drawn sec 31(3) above and also a reference to the notification no. 13/2017 where the recipient to whom the RCM would need to be paid has been notified ref http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification13-CGST.pdf
2- Further referring the notification 13/2017 mentioned in the above point, the person who would be liable to pay RCM- "The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification", however tax invoice to be issued by GTA when he is registered,
3- As per the notification 5/2017 - http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-5-central-tax-english.pdf which exempts from registration to those persons who wholly supplies goods/ services covered under RCM where tax are being PAID by the recipient of such supplies, it essentially means that as long as RCM is being discharged by the recipient ( always a reg person or covered under list of persons liable to pay under RCM), there is no need for such supplier (in our example it is GTA) to be registered under the act even the supplies value exceeds by minimum threshold limit i.e. 20 lacs (or 10 lacs),
4- By recent council meeting http://www.cbec.gov.in/resources//htdocs-cbec/gst/Decisions-in-20th%20-GST-council-meeting.pdf refer point no. 8 where GTA has been provided an option to avail 12% on full ITC under forward charge (however the option can be availed at the beginning of the financial year only),
5- Now we can answer the questions covering different scenarios-
a- Where GTA supplies to a person (who pays or liable to pay as per notification 13/2017) registered under the act then there is no limit for GTA after which it needs to get himself register under the act,
b- When GTA supplies certain amount of supplies to a person (who pays or liable to pay as per notification 13/2017) & who is not covered under the notification 13/2017 list of persons then its total supplies (Supplies on which reg person paid RCM & supplies to Unreg persons) would be used to calculate reaching threshold for registration (i.e. 20 lacs) & accordingly GTA needs to register himself once crosses 20 lacs (or 10 lacs),
c- When GTA makes supplies to an UREGD recipient then GTA needs to pay the RCM liability provided GTA is registered under the act,
d- If GTA is not registered under the act (either availing exemption from registration or not making total supplies which are more than 20 lacs) and makes supplies to UNREG person (either covered or not covered in a list of persons as per notification 13/2017) then there no way out to levy GST on such transactions,
e- Even the cases where registered GTA had to pay/ discharge GST while supplying to an UNREG person then also ITC is not available i.e."5% with no ITC" however referring to the recent meeting of GST council, an option has been given to GTA to use 12% forward charge and avail ITC in full,
Please note that the scenarios are based on intra state supplies and please keep in mind that the registered GTA needs to issue invoice and the liability to pay the GST has been analysed above.
The above discussion would certainly help in finding all possible answers on RCM hopefully..
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GTA (Goods transport agency) supplies its services to an unregistered entity under GST, How would the tax liability would be discharged since GTA is covered under sec 9(3) and might opt for exemption from registration?
Suggested approach:
Sec 9(3) " The Government may, on the recommendations of the Council, by notification,
specify categories of supply of goods or services or both, the tax on which shall be paid on
reverse charge basis by the recipient of such goods or services or both 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"
Sec. 31 (3) (f) "a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both "
Sec 2(6) “aggregate turnover” means the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis), exempt supplies, exports of goods or services or both and inter-State
supplies of persons having the same Permanent Account Number, to be computed on all
India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Hence following summary can be drawn after reading/ referring such cases -
1- The requirements mentioned in sec 9(3) is applicable on registered person as per the reference drawn sec 31(3) above and also a reference to the notification no. 13/2017 where the recipient to whom the RCM would need to be paid has been notified ref http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification13-CGST.pdf
2- Further referring the notification 13/2017 mentioned in the above point, the person who would be liable to pay RCM- "The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification", however tax invoice to be issued by GTA when he is registered,
3- As per the notification 5/2017 - http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-5-central-tax-english.pdf which exempts from registration to those persons who wholly supplies goods/ services covered under RCM where tax are being PAID by the recipient of such supplies, it essentially means that as long as RCM is being discharged by the recipient ( always a reg person or covered under list of persons liable to pay under RCM), there is no need for such supplier (in our example it is GTA) to be registered under the act even the supplies value exceeds by minimum threshold limit i.e. 20 lacs (or 10 lacs),
4- By recent council meeting http://www.cbec.gov.in/resources//htdocs-cbec/gst/Decisions-in-20th%20-GST-council-meeting.pdf refer point no. 8 where GTA has been provided an option to avail 12% on full ITC under forward charge (however the option can be availed at the beginning of the financial year only),
a- Where GTA supplies to a person (who pays or liable to pay as per notification 13/2017) registered under the act then there is no limit for GTA after which it needs to get himself register under the act,
b- When GTA supplies certain amount of supplies to a person (who pays or liable to pay as per notification 13/2017) & who is not covered under the notification 13/2017 list of persons then its total supplies (Supplies on which reg person paid RCM & supplies to Unreg persons) would be used to calculate reaching threshold for registration (i.e. 20 lacs) & accordingly GTA needs to register himself once crosses 20 lacs (or 10 lacs),
c- When GTA makes supplies to an UREGD recipient then GTA needs to pay the RCM liability provided GTA is registered under the act,
d- If GTA is not registered under the act (either availing exemption from registration or not making total supplies which are more than 20 lacs) and makes supplies to UNREG person (either covered or not covered in a list of persons as per notification 13/2017) then there no way out to levy GST on such transactions,
e- Even the cases where registered GTA had to pay/ discharge GST while supplying to an UNREG person then also ITC is not available i.e."5% with no ITC" however referring to the recent meeting of GST council, an option has been given to GTA to use 12% forward charge and avail ITC in full,
Please note that the scenarios are based on intra state supplies and please keep in mind that the registered GTA needs to issue invoice and the liability to pay the GST has been analysed above.
The above discussion would certainly help in finding all possible answers on RCM hopefully..
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