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SN Panigrahi
1
SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management,
Contract Management, Supply Chain Management, Procurement,
Strategic Sourcing, Global Sourcing, Logistics, Exports & Imports,
Indirect Taxes – GST etc.
He had done more than 150 Workshops Globally on above
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India Organization)
ZED Consultant – Certified by QCI – MSME (Govt of India Organization)
Member Board of Studies, IIMM
9652571117
Co-Chairman, Indirect Tax Committee, FTAPCCI
SN Panigrahi snpanigrahi1963@gmail.com
Hyderabad Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts. 2
SN Panigrahi, Essenpee Business Solutions
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Forward charge or direct charge is the mechanism where the supplier of goods / services is
liable to pay tax. It is the tax responsibility of the supplier of goods and services to Collect Tax on the
goods and services supplied by him to the recipient and to Pay the same to the government.
Customs Act1962
Import of Goods
Customs Tariff Act 1975
RCM Supply
Supplier Recipient
Only Services
Only Goods Recipient to Pay Tax
• Recipient of Goods or Services Notified under sec 9(3) or sec 9(4) must be Registere
Registration d under GST - Section 24(iii) of CGST Act
The Recipient after making Payment of GST on RCM basis against generation of Self
Availing ITC invoice is eligible to take ITC subject to Eligibility
RCM Applicable to Composition •The composition scheme registered individuals also come under the reverse charge,
Scheme & on Advance Payment • No credit of RCM be available. RCM also applicable to payments made in Advance
Relaxed Deferred
w.e.f. 1-07-2017 till 13-10-2017 w.e.f. 13-10-2017 till 30.09.2019
Notification No. 08/2017 – Central Tax (Rate) dated 28-06-2017 Notification No. 38/2017 – Central Tax (Rate); 13th Oct, 2017
No RCM on Intra-State Supplies Received from Un-Registered & Notification No. 10/2018 – Central Tax (Rate); 23rd March, 2018
Supplier(s) for value not exceeding five thousand rupees in a day. Notification No.12/2018 – Central Tax (Rate); 29th June, 2018
No such exemption was granted under IGST act. Notification No. 22/2018 – Central Tax (Rate); 6th August, 2018
vide Notification No. 01/2019 – Central Tax (Rate) dated 29-01-2019, Central Government rescinds principle Notification No.
08/2017 – Central Tax (Rate) dated 28-06-2017 and consequently exemption provided till 30th September 2019 stands
withdrawn.
SN Panigrahi, Essenpee Business Solutions
Series of Changes in Section 9(4) Notified from Time to Time by Government
As per section 9(4) of CGST Act 2017, RCM will be applicable to all the registered persons on all type
of supplies of goods or services from an unregistered person
As per Notification No. 8/2017 CGST(Rate) dated 28.06.17 RCM will be applicable only when the aggregate value of supplies
received by a registered person from unregistered person in the Intra-
State Transaction Exceeds Rs. 5000 per day.
As per Notification Provisions of RCM u/s 9(4) were suspended Efective from 13th
No. 38/2017 CGST(Rate) dated 13.10.17 Oct’2017 up to 31.03.18.
As per Notification Provisions of RCM u/s 9(4) were suspended up to 30.06.18.
No. 10/2018 CGST(Rate) dated 23.03.18
As per Notification Provisions of RCM u/s 9(4) were suspended up to 30.09.18.
No. 12/2018 CGST(Rate) dated 29.06.18
As per Notification Provisions of RCM u/s 9(4) were suspended up to 30.09.19.
Notification No. 22/2018 – Central Tax (Rate); 6th August, 2018
As per Notification Provisions of RCM u/s 9(4) will be applicable from 01.02.19
No. 1/2019 CGST(Rate) dated 29.01.19
As per Notification CGST (Amendment) Act, 2018 will be applicable which has made
No. 2/2019 CGST dated 29.01.19 changes in the provision of section 9(4)
As per section 9(4) of RCM will be applicable to the specific class of registered
CGST(Amendment) Act 2018 persons on the specific category of supplies of goods or
services from an unregistered person.
Conclusion: Provisions of RCM u/s 9(4) will be applicable ONLY after the Government will notify
➢ The specific category of registered persons on whom it will be applicable;
➢ The specific category of supply of goods or services on which it intends to make it applicable.
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Amendment to Sec 9(4) effective from 01-02-2019 read as follows:
“Section 9(4).
Notified Goods
Notification No. 04/2017- Central Tax (Rate) dated
28th June, 2017 & Notified Services
Notification No-04/2017-Integrated Tax (Rate)dated
28-06-2017 Notification No. 13/2017- Central Tax (Rate) dated
Notification No. 36/2017- Central Tax (Rate) dated 28th June, 2017
13th October, 2017 & Notification No. 33/2017- Central Tax (Rate) dated
Notification No. 37/2017-Integrated Tax (Rate) 13th October, 2017
dated13-10-2017 Notification No. 03/2018- Central Tax (Rate) dated
Notification No. 43/2018- Central Tax (Rate) dated 25th January, 2018
14th November 2017 & Notification No- 45/2017- Notification No. 15/2018- Central Tax (Rate) dated
Integrated Tax (Rate) dated 14-11-2017 w.e.f. 26th July, 2018
15.11.2017 Notification No. 29/2018- Central Tax (Rate); Dated
Notification No. 11/2018- Central Tax (Rate) dated 31St December, 2018
28th May, 2018 &
Notification No- 12/2018-Integrated Tax (Rate), both
dated 28-05-2018
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Notification No.4/2017-Central Tax (Rate), Dt : 28th June, 2017
Amended (by adding Sr No 6) vide Notification No. 36/2017-Central Tax (Rate), 13th October, 2017
Amendment (by adding Sr 4A) vide Notification No : Notification No. 43/2017-Central Tax (Rate),
14th November, 2017
Amended vide Notification No. 11/2018-Central Tax (Rate) dated 28th May, 2018
5 Supply of lottery. State Government, Union Territory or Lottery distributor or selling agent. Explanation.- For the purposes of this entry,
any local authority lottery distributor or selling agent has the same meaning as assigned to it in
clause (c) of Rule 2 of the Lotteries (Regulation) Rules, 2010, made under the 2
provisions of sub section 1 of section 11 of the Lotteries (Regulations) Act, 1998
(17 of 1998).
6. Any Chapter Used vehicles, seized and Central Government, State Any registered person
confiscated goods, old and used Government, Union territory or a local
goods, waste and scrap authority
7 Any Chapter Priority Sector Lending Certificate Any registered person Any registered person
Services of Arbitral Services supplied by an Arbitral Tribunal to any business entity located in the
Tribunal Taxable Territory.
Govt. Services Services supplied by the Central Government, State Government, Union territory or
local authority to a any business entity excluding Certain Categories
Renting of
Services supplied by the Central, State Government, Union territory or local authority
Immovable Property
by way of Renting of Immovable Property to a Person Registered under GST
by Govt.
Transfer of Services supplied by Any Person to Promotor by way of Transfer of Development Rig
Development Rights hts or Floor Space Index (FSI) for construction of a project by a promoter
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Long Term Lease of Long Term Lease of Land (30 years or more) by Any Person against Consideration in
Land the form of Upfront Amount and / or Periodic Rent for construction of a Project
Insurance Agent Services supplied by an insurance agent to person carrying on insurance business.
Supply of services by a music composer, photographer, artist or the like by way of transfer or
Services by Artists permitting the use or enjoyment of a copyright to a music company, producer or the like.
Services by an Supply of services by an author by way of transfer or permitting the use or enjoyment
Author of a copyright Relating to original literary works to a publisher.
RBI Overseeing Supply of Services by the Members of Overseeing Committee to Reserve Bank of
Committee India.
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Services supplied by individual direct selling agents (DSAs) other than a body corporate
Services by DSAs partnership or limited liability partnership firm to bank or non-banking financial company
(NBFCs)
Services by
Services provided by business facilitator (BF) to a banking company.
Business Facilitator
Services by Agent of
Services provided by an Agent of business correspondent (BC) to business
Business
correspondent (BC).
Correspondent (BC)
Security services (services provided by way of supply of security personnel) provided
Security Services
to a Registered Person
Services provided by Any Person, other than a body corporate way of renting of any motor
Renting of
vehicle designed to carry passengers where the cost of fuel is included in the consideration
Motor Vehicle charged from the service recipient, provided to a body corporate
Services of Lending Services of lending of securities under Securities Lending Scheme, 1997 (“Scheme”)
of Securities of Securities and Exchange Board of India (“SEBI”), as amended
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GTA
Heading 9965 & 9967 (Goods Transport Services)
The term “goods transport agency” has not been defined in any of the GST acts
or Rules.
➢ Loading / unloading,
➢ Packing / unpacking,
➢ Trans-shipment,
If these services are not provided as independent activities but are the means for successful
provision of GTA Service, then they are also covered under GTA.
3. Individual truck/Tempo operators who does not issue Consignment note will
not come in to the ambit of GTA. They are exempt from GST.
(a) any factory registered under or governed by the Factories Act, 1948; or
(b) any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of
India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under CGST/IGST/SGST/ or UTGST Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person; located in the taxable territory.
8[Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by
way of transport of goods in a goods carriage by road, to, –
(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies,
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(a) Any factory registered under or governed by the Factories Act, 1948; or
(b) Any society registered under the Societies Registration Act, 1860 or under any other
law for the time being in force in any part of India; or
(c) Any co-operative society established by or under any law;
(d) Any person registered under CGST/IGST/ SGST/UTGST Act; or
(e) Any body corporate established, by or under any law; or
(f) Any partnership firm whether registered or not under any law including association
of persons; or
(g) Any casual taxable person located in the taxable territory.
RCM has been provided in GST law for GTA and the recipient of GTA service (the consignor or consignee whoever
pays freight will be treated as recipient of the service as per the Explanation provided in the Notification) and he is
required to pay GST.
Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017
“Goods Transport Agency” means any person who provides service in relation to transport of
goods by road and issues consignment note, by whatever name called. (Explanation to 9(iii) of
Notification No. 11/2017-Central Tax (Rate), the 28th June, 2017 & Paragraph 2 Clause (ze) to
Notification 12-2017 dated 28 June 2017 – same as defined in Clause 65(50b) of Finance Act, 1994)
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Rate of GST in case of GTA:
A) If GTA Provides the Services In relation to Carrying the Following: GTA
1. Agriculture Produce
2. Milk, salt and food grain including flour, pulses and rice
3. Organic manure Carrying Rate of GST
4. Newspapers or magazines registered with the registrar of Newspapers Exempted Goods - Nil
5. Relief materials meant for victims of natural or manmade disasters(Corona)
6. Defense or military equipment
In this case rate of GST Will be 0% Recipient
D) If GTA Provides Services in Relation to Carrying Used Household Goods No reverse charge mechanism in
for Personal Use: case of exempted supplies.
In this case also rate of GST will be 0%
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Legal Services’ means any service provided in relation to advice,
consultancy or assistance in any branch of law, in any manner and
includes representational services before any court, tribunal or
authority.
(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate,
by way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the
case of special category states) in the preceding financial year;
Explanation. - “legal service” means any service provided in relation to advice, consultancy or
assistance in any branch of law, in any manner and includes representational services before
any court, tribunal or authority.
Yes
No No
As per Article 154 of the Constitution, the executive power of the State shall be
vested in the Governor and shall be exercised by him either directly or indirectly through
officers subordinate to him in accordance with the Constitution. Further, as per article 166
of the Constitution, all executive actions of the Government of State shall be expressed to
be taken in the name of Governor. Therefore, State Government means the Governor or
the officers subordinate to him who exercise the executive powers of the State vested in
the Governor and in the name of the Governor.
➢ a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally
entitled to, or entrusted by the Central Government or any State Government with the control or
➢ a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
It would not include other bodies which are merely described as a ‘local body’ by virtue of a local law.
For example, State Governments have setup local developmental authorities to undertake developmental
works like infrastructure, housing, residential & commercial development, construction of houses, etc.
The Governments setup these authorities under the Town and Planning Act.
Examples of such developmental authorities are Delhi Development Authority, Ahmedabad Development
Authority, Bangalore Development Authority, Chennai Metropolitan Development Authority, Bihar Industrial
Area Development Authority, etc.
Such developmental authorities formed under the Town and Planning Act are not qualified as local
authorities for the purposes of the GST Acts.
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Would a statutory body, corporation or an authority constituted under an
Act passed by the Parliament or any of the State Legislatures be regarded
as ‘Government’ or “local authority” for the purposes of the GST Acts?
Answer: A statutory body, corporation or an authority created by the Parliament or a State Legislature is
neither ‘Government’ nor a ‘local authority’. Such statutory bodies, corporations or authorities are normally
created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b)
and article 154(2)(b) of the Constitution respectively.
It is a settled position of law (Agarwal Vs. Hindustan Steel AIR 1970 Supreme Court 1150) that the
manpower of such statutory authorities or bodies do not become officers subordinate to the President under
article 53(1) of the Constitution and similarly to the Governor under article 154(1).
Such a statutory body, corporation or an authority as a juridical entity is separate from the State and cannot
be regarded as the Central or a State Government and also do not fall in the definition of ‘local authority’.
Thus, regulatory bodies and other autonomous entities would not be regarded as the government or
local authorities for the purposes of the GST Acts.
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Services supplied by the Central Government, State Government, Union territory or local
authority to a business entity excluding the following:
Thus, the recipient of supply of goods or services is liable to pay the entire amount of tax involved in
such supply of services or goods or both.
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Answer: The Government provides license to various companies including Public Sector Undertakings for
exploration of natural resources like oil, hydrocarbons, iron ore, manganese, etc.
For having assigned the rights to use the natural resources, the licensee companies are required to pay
consideration in the form of annual license fee, lease charges, royalty, etc to the Government.
The activity of assignment of rights to use natural resources is treated as supply of services and
the licensee is required to pay tax on the amount of consideration paid in the form of royalty or
any other form under reverse charge mechanism.
The applicant sought to know whether such a royalty paid/dead rent on account of mining
rights was liable to tax in the hands of applicant under the reverse charge mechanism or not
and If so, what is the rate of GST- payable on the royalty/ dead rent?
The activity undertaken by the applicant is classifiable under Heading 9973 (Leasing or rental
services, with or without operator), as mentioned in the annexure at Serial No. 257 (licensing
services for the right to use minerals including its exploration and evaluation) and sub heading
997337 of Notification number 11/2017-CT (Rate) dated 28.06.2017. The applicant is liable to
discharge tax liability under reverse charge mechanism vide Notification no.13/2017-CT (Rate),
dated 28.06.2017 (as amended from time to time) of the CGST Act, 2017.
The activity undertaken by the applicant falls at item (viii) of serial no. 17 of Notification
no.11/2017, which was further amended vide Notification No. 27/2018-Central Tax (Rate) dt:31-
12-2018 and attracts 18% GST (9% CGST+ 9% SGST) w.e.f. 01.01.2019.
Clay Craft India Pvt Ltd has filed an application before the Rajasthan bench of the AAR to
sought clarification on Whether GST is payable under Reverse Charge Mechanism (RCM) the
salary paid to Director of the company who is paid salary as per contract and Whether the
situation would change if the Director also is a part time Director in other company.
The company said its directors are working as employees for which
➢ They are being Compensated by way of a regular salary and other allowances.
➢ The company is deducting TDS on their salary and PF laws are also applicable to their
service.
➢ Directors are the employees of the company and are working as such besides being
Director of the company.
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In re Clay Crafts India Pvt. Ltd. (GST AAR Rajasthan)
Advance Ruling No. RAJ/AAR/2019-20/33; 20/02/2020
Director is the supplier of services and the applicant of the company is the recipient of the
services.
Held by AAR
(a) Whether GST is payable under Reverse Charge Mechanism (RCM) the salary paid to
Director of the company who is paid salary as per contract?
The consideration paid to the Directors by the applicant company will attract GST under reverse
charge mechanism as it is covered under entry No. 6 of Notification No. 13/2017 Central Tax
(Rate) dated 28.06.2017 issued under Section 9(3) of the CGST Act, 2017.
(b) Whether the situation would change from (a) above if the Director also is a part time
Director in other company?
Situation will remain same as (a) above and will attract GST under reverse charge mechanism.
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Security service is a service wherein a person supplies security personnel to another person for a
consideration. Earlier in Service tax regime, security services provided by individual, HUF or
partnership firm to a body corporate were covered under Reverse Charge Mechanism
(RCM).
However, with the enactment of GST Act, 2017 the concept of RCM on security services
was abolished and the supplier of security service was made liable to pay GST.
That considering the numerous problems in tax collection from small security service providers,
such service has been brought under the purview of RCM.
Hence, RCM on Security Services has been introduced in GST by the Government
vide Notification No. 29/2018-Central Tax (Rate) dated 31.12.2018. with effect from
01.01.2019, any registered person receiving Security services (services provided by way of
supply of security personnel) from any person other than a body corporate is required to pay
GST on RCM basis.
GST to be Paid on
Forward Charge basis
by Supplier
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RCM on Security service is applicable only when the supplier of service is any person other than a
body corporate.
The term "body corporate" is defined in Section 2(11) of the Companies Act, 2013. This
includes a private company, public company, one personal company, small company, Limited
Liability Partnerships, foreign company etc.
The Central Government recently notified that the Limited Liability Partnerships (LLP)
registered under the 2008 Act must be considered as a partnership firm or Firm under the Goods
and Services Tax (GST) regime
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According to Section 2 (11) of Compaznies Act, 2013,'body corporate means "“body corporate” or
“corporation” includes a company incorporated outside India, but does not include-
a. a corporation sole
c. any other body corporate (not being a company as defined in this Act), which the Central Govt.
may, by a notification in the official gazette, specify in this behalf.
Now, the concept of Corporation Sole is not defined anywhere in the Act. But concisely, apart from
those excluded specifically, a body corporate means any entity that has its separate legal existence
apart from the persons forming it.
So, a body corporate shall include: a company, a foreign company, a corporation, a statutory
company, a statutory body, an LLP, etc. and such bodies that have separate legal existence.
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RCM – Import Services : OIDAR
Sr. Services Provider of Recipient of Service
No service
1 Taxable services provided or Any person Any person located in the
agreed to be provided by who is located taxable territory other than
any person who is located in in a non- Non-assessee online
a non-taxable territory and taxable recipient (Business
received by any person territory Recipient)
located in the taxable
territory other than non-
taxable online recipient
#
(OIDAR)
(OIDAR) is a category of services provided through the medium of internet and received by the recipient
online without having any physical interface with the supplier of such services.
Section 2(17) of IGST Act, 2017 - OIDAR as services whose delivery is mediated by information technology
over the internet or an electronic network and the nature of which renders their supply essentially automated
involving minimal human intervention. These include electronic services such as:
E.g. download of an e-book online for a payment would amount to receipt of OIDAR services by the
consumer.
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Conditions to Qualify for OIDAR
For an OIDAR Service, a service must have to qualify two cumulative conditions, in the absence of one conditions, the
service will not be OIDAR.
1.The services shall be provided, essentially by use of information technology over the internet or an electronic
network; and
2.The nature of such services renders their supply essentially automated and involving minimal human
intervention.
The use of information technology is essential with an automated or almost automated supply. Where the supply is
tailor made and organized/performed only after efforts of human intervention shall not be treated as OIDAR.
Example: Website providing legal and taxation Support:
A website provided legal and taxation support to its subscribers, where it provided its member to access latest
law/rules/regulation and court orders and also provides tailor-made legal opinion. The services provided in relation to
access of latest law/rules/regulations, there is no human intervention, thus it will fall under OIDAR.
Whereas the formulation of a Legal opinion will require intensive research which cannot be done by artificial intelligence,
it will require some human interventions to work on given circumstances, thus will not fall under the definition of OIDAR.
Thus, for these kind of websites, it will be pragmatic to segregate these two services and charge them separately,
providing one service complimentary or free with other services, will lead complication.
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What services would NOT be considered as OIDAR services?
Clarification:
1.any Government,
2.local authority,
3.governmental authority,
4.an individual or
5.any other person not registered under the Act,
and such person receiving online information and database access or retrieval services in relation to any
purpose other than commerce, industry or any other business or profession, located in taxable territory.
If these persons receive any services for commerce, industry or any other business or profession, then they
will not be considered as non-taxable online recipient.
The expression “governmental authority” means an authority or a board or any other body:
Recipient Recipient
Non-registered Person or
Registered Business Entity
Individual.
64
RCM – Import of Goods – Ocean Freight Paid by
Overseas Supplier INCOTERM : CNF & CIF
Sr. Services Provider of Recipient of Service
No service
10 Services supplied by a A person Importer, as defined in
person located in non- located in clause (26) of section 2 of
taxable territory by way of non-taxable the Customs Act, 1962(52
transportation of goods by territory of 1962), located in the
a vessel from a place taxable territory.
outside India up to the
customs station of
clearance in India
Entry No.9 of Notification No. 8/2017 - Integrated Tax (Rate) - GST at the rate of 5%
and Entry 10 of Notification No. 10/2017 - Integrated Tax (Rate) dated 28 June 2017 – GST Payable by Importer
on RCM
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In a Landmark Ruling, the Gujarat High Court in the case of Mohit Minerals Pvt. Ltd. & Ors. Vs. Union of
India & Ors. [TS-29-HC-2020(GUJ)-NT], has held that no tax is leviable on the ocean freight for services
provided by a person located in non-taxable territory by way of transportation of goods by a vessel
from a place outside India up to the customs station of clearance in India.
In this case, the taxpayer was engaged in the business of importing coal from various countries. It discharges
the customs duty at the time of import on the assessable value as determined under Section 14 of the
Customs Act, 1962. The value also includes ocean freight.
In addition to the levy of customs duty and IGST at the time of import, the taxpayer (as an importer) was also
required to pay IGST on ocean freight, leading to double taxation on the ocean freight amount.
The taxpayers, being aggrieved by the fact that ocean freight is being taxed twice, had filed various writ
petitions before the Gujarat High Court seeking quashing of the notifications mentioned above, by declaring
that the same is ultra-vires the IGST Act, 2017.
•IGST cannot be imposed on the same freight amount by treating it as a supply of service since freight also suffers
IGST as a part of the assessable value of imported goods. This is necessary to avoid the vice of double taxation.
•The notifications mentioned above, being subordinate legislation, which acts as to deem the importer to be liable to
pay tax under reverse charge, are ultra-vires the provisions of the IGST Act. Consequently, the imposition of IGST on
ocean freight and deeming the importer as the person liable to pay tax are unconstitutional, given that there is no
statutory sanction for levy and collection of such tax.
Based on the above, the High Court held that no tax is leviable under the IGST Act on ocean freight for the services
provided by a person located in non-taxable territory by way of transportation of goods by a vessel from a place
outside India up to the customs station of clearance in India. Moreover, the notifications mentioned above are
declared ultra-vires the IGST Act, as they lack legislative competency. Hence, both the notifications are hereby
declared to be unconstitutional.
Import
Section 2 (11) of IGST Act,
2017 :
1. Supplier - located Levy of Tax
Import of outside India; Import with Consideration
Services 2. Recipient - located in Registered Recipient
India; and on Reverse Charge
3.The place of supply of
service is in India
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As per Sec 2(102) of CGST Act , services means anything
other than goods, money and securities but includes activities
relating to the use of money or its conversion by cash or by any
other mode, from one form currency or denomination to
another form, currency or denomination for which a separate
consideration is charged.
Import of
Service Treated as Supply : Import Related person or from any of his other
establishments outside India
Without
Consideration
Other Cases – Not Treated as Supply
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Section 2(11) of IGST Act 2017 defines Import of Services as
follows:
i) Any service supplied by any person who is located in a non-taxable territory to any
person other than nontaxable online recipient.
Thus, the import of services will fall under this category as supply of any service where the
supplier is located outside India and the recipient is located in India, the place of supply
of service will be in India.
It may be noted that, Import of services by an Indian branch from their overseas branch, in
the course or furtherance of business, even if without consideration, will be a supply due
to provision contained in Schedule I of the CGST Act, 2017.
Example 2:
Mr. X went to USA and take training session for body Detox. He paid $10000 for this
services. In this case he will not be liable for RCM as the place of supply is outside India.
I specifically covered this situation in example 2 where the PoS was not in India. Please
take note that RCM is only for import of services and import of service will be fulfilling the
three conditions I have enumerated earlier. PoS Should be in India for import of services. If
it is not in India , the service is not import and thus the RCM will not be applicable.
Conditions
Cement should be
80% of Inputs and Input Services – Shall be
Purchased from
Purchased from Registered Persons Registered Persons
On Shortfall of only
Purchases from 80%
Other than services by way
To be Paid
of grant of development
On RCM
rights, long term lease of Pay Tax @ Tax on Cement
land (against upfront 18% on Purchased
payment in the form of RCM Basis On Capital from
Goods under Unregistered
premium, salami, on Input & person shall
RCM at
development charges etc.) or Input Applicable be paid @
FSI (including additional Services Rates. Current Rate
FSI), electricity, high speed other than (28%) under
RCM
diesel, motor spirit, natural Cement
gas Notification No. 03/2019-Central Tax (Rate); 29th March, 2019
Notification No. 07/2019- Central Tax (Rate); 29th March, 2019
Amended vide Notification No. 24/2019- Central Tax (Rate); 30th Sep, 2019
Inputs and Input Services on which Tax is Paid on Reverse Charge basis shall be Deemed to have been
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Purchased from Registered Person
Newly Notified Service Under Notification No. 05/2019 dated 29th March,2019 on
which RCM Applicable from 1st April 2019.
Sr. Services Provider of Recipient of Service
No service
1 Services supplied by any person Any person Promoter
by way of Transfer of
Development Rights or Floor
Space Index (FSI) (including
additional FSI) for construction of
a project by a promoter.
2 Long Term Lease of Land (30 Any person Promoter
years or more) by any person
against consideration in the form
of upfront amount (called as
premium, salami, cost, price,
development charges or by any
other name) and/or periodic rent
for construction of a project by a
promoter.
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Treatment of TDR/ FSI and Long Term Lease for projects
commencing after 01.04.2019
Supply of Transfer of Development Rights (TDR) Developer /
Landowner
Builder
GST Exempted Before CC After CC
To the Extent of Residential Builder to Pay on RCM
Project only.
Completion Certificate
Conditions
1. The constructed flats are sold before
issuance of Completion Certificate Builder shall be Liable to pay tax on TDR,
and Tax is paid on them FSI, long term lease (premium) of land
2. The exemption is granted only to the extent
under RCM in respect of Flats sold after
of development rights pertaining to
Residential Apartments.
Completion Certificate
3. Project having both Residential +
Commercial, then exemption shall be only
to the extent of tax payable on
development rights pertaining to Time of Supply
residential apartments If Conditions not Fulfilled, Date of Issue of CC
then Builder to Pay on RCM 81
SN Panigrahi
SN Panigrahi, Essenpee Business Solutions
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Section 49 of CGST Act, 2017; read with Rules 85 to 88 of CGST Rules, 2017 deals with payment of
tax, interest, penalty and other amounts. Focus on e-payments for the liabilities arising under GST rather
than over the counter payments. Simultaneously, for the small assessee, over the counter payment by
cash / cheque/ DD is permissible up to the limit of Rs. 10,000/- per challan per tax period.
Section 49 of
CGST Act, 2017 Types of Registers /
Ledgers
➢ Self Invoice shall be created by Recipient, showing Tax Rate & Amount and
Manner of Other details as per Rule 46 CGST Rules
Payment ➢ Section 31(3)(f) of the CGST Act
of GST under Reverse
Charge
➢ Tax under Reverse Charge can be Paid through Cash only
➢ Rule 85(4) of CGST Rules
Any liability of tax payable under reverse charge shall be discharged by debiting the electronic
cash ledger. In other words, reverse charge liability cannot be discharged by using input tax credit
reflecting in electronic credit ledger.
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Recipient
Supplier Registered Under
Composition Scheme
Supplier Recipient
The condition of payment of value of service within 180 days of the date of supplier invoice is
not applicable on supplies liable to tax under RCM. Hence, there would be no interest liability
on account of the same.
Second Proviso to Sec 16(2) CGST Act
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SN Panigrahi, Essenpee Business Solutions
The GSTR-2A is a Purchase-Related Tax Return that is Auto-Populated for
each business by the GSTN portal from the following returns of the sellers /
counterparty
Return Filed by
GSTR 1 Regular registered seller
GSTR-5 Non-resident
GSTR 6 Input Service Distributor
GSTR 7 Person liable to deduct TDS
GSTR 8 Ecommerce
There will be no auto-population of details of the GST paid under the RCM in GSTR 2A.
However, ITC can be availed only after Payment of GST on RCM
In case of supply of service by associated enterprises located outside India, the time of supply
shall be earlier of–
Import of services by United Nations or a specified international organisation for official use
of the United Nations or the specified international organisation is exempt from
GST (Notification No. 9/2017-IT (Rate) dated 28-6-2017 – inserted w.e.f. 27-7-2018.)
That means a person who is required to pay tax under reverse charge has to compulsorily register under
GST and the threshold limit of Rs. 20 lakh (Rs. 10 lakh for special category states except J & K) is not
applicable to them.
As per Section 31 (3) (g) of the CGST Act, 2017, a registered person who is
liable to pay tax under section 9 (3) or section 9 (4) i.e. under reverse
charge basis is required to issue a Payment Voucher at the time of making
payment to the supplier.
Rule 52 of the Central Goods and Service Tax Rules, 2017 contains
details/particulars which are required to be provided in payment voucher
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Input Tax Credit
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Input Tax Credit (ITC)
A supplier cannot take ITC of GST paid on goods or services used to make supplies on which recipient is
liable to pay tax.
The Recipient after making Payment of GST on RCM basis against generation of Self invoice is eligible to
take ITC subject to Eligibility
As per Sec 31(3) (f) of the CGST Act, 2017 read with Rule 46 of the CGST Rules, 2017, every
tax invoice has to mention whether the tax in respect of supply in the invoice is payable
on reverse charge.
•The recipient of the supply is liable to pay tax based on Self Generated Invoice.
•Every person who is paying tax on reverse charge basis has to mention “Tax Being Paid on
reverse charge” in his tax invoice.
•There will be a single copy of such invoice which he shall retain for return filing purpose.
Sr. Description of HSN/ Qty Unit Rate Total Taxable CGST SGST IGST Total
No. Goods/Service SAC value(Rs.) Rate Rs. Rate Rs. Rate Rs.
Total
Value in Words: For M/s __________________________
Terms & Condition:
1.
2.
3.
4. Authourized Signatory
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Items Required in Tax invoice in GST (Rule 46)
a Name, Address, GSTIN No of Supplier
Unique Consecutive Serial Number of Each Invoice in one or multiple series – 16 Digits (Can have “-”
b and “/”
But it should be different series for Each Year
c Date of Issue of Invoice
d Name , Address ,GSTIN of recipient If Registered
In Case of Unregistered Buyer, Name, Address, State, Place of Delivery is compulsorily required if
e
Invoice Value before taxes is more than 50000
In Case of Unregistered Buyer, Name, Address, State, Place of Delivery is compulsorily required if
f
Invoice Value before taxes is less than 50000 if customer demands
g HSN Code of Goods
h Description of Goods
i Quantity as well as Quantity Code or Units
j Total Value of Goods or Services or both
k Discount if any and Taxable Value (Total Value-Discount)
l Rate of Tax (Separately show CGST, SGST, without IGST, UTGST, Cess if any)
m Amount of Tax
n Place of Supply (It is required For Interstate Sales)
o Address for Delivery
p Whether Tax is Payable Under Reverse Charge
q Signature/Digital Signature / Electronic Signature of Authorized Signatory
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Form GSTR-1: - In the case of registered person supplying specific goods and/or
services which are notified by government to registered recipient, where tax has to be
paid on reverse charge basis, the details (invoice wise, rate wise) of such supplies shall
be reflected in Table 4B of Form GSTR-1.
GSTR 3B GSTR 3B
Table 3.1C Table 3(1)(D) & 4A(3)
GSTR – 9 GSTR -9
Table 5C Table 4G, 6C & 6D
GSTR – 9C GSTR 9C
Table 7D Table 9
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Form GSTR-1: - In the case of registered Taxable person Receiving Supply of Notified goods and/or services or
Receipt of Supplies from Un-registered Supplier, where tax has to be paid on reverse charge basis, the details the
Self Invoice Series should be reflected in Documents Issued During the Tax Period in Table 13.2 & 13.7 of Form
GSTR-1.
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Form GSTR-3B: - In case of registered Taxable person Receiving Supply of Notified goods and/or
services or Receipt of Supplies, where tax has to be paid on reverse charge basis, it should be
Reflected in Table 3.1 (d) & Table 4A (3) of Form GSTR-3B.
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Form GSTR-9: - The aggregate value of all inward supplies (including advances and net of
credit and debit notes) on which tax is to be paid by the recipient (i.e.by the person filing the
annual return) on reverse charge basis shall be reflected in Table 4G. This shall include
supplies received from registered persons and unregistered persons on which tax is levied on
reverse charge basis. This shall also include aggregate value of all import of services.
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Form GSTR-9 : The aggregate value of input tax credit availed on all inward supplies received
from unregistered persons (other than import of services) on which tax is payable on reverse
charge basis shall be declared in Table 6C. It may be noted that the total ITC availed is to be
classified as ITC on inputs, capital goods and input services. However, for FYs 2017-18 and 2018-
19, the registered person shall have an option to either report the breakup of input tax credit as
inputs, capital goods and input services or report the entire input tax credit under the “inputs” row
only in terms of Notification No. 56/2019-Central Tax, dated 14-11-2019.
The aggregate value of input tax credit availed on all inward supplies received from
registered persons on which tax is payable on reverse charge basis shall be declared in
Table 6D. It may be noted that the total ITC availed is to be classified as ITC on inputs, capital
goods and input services. But for FYs 2017-18 and 2018-19, the registered person shall have
an option to either report Table 6C and Table 6D separately or report the consolidated details
of Table 6C and 6D in Table 6D only as per Notification No. 56/2019-C.T., dated 14-11-2019.
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Form GSTR-9 : Table 6C & 6D
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Form GSTR-9C: - Supplies where tax was paid on reverse charge basis by the recipient shall be declared under the
head titled “RC” in Table 9.
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Form GSTR-9C:
Any ITC availed in respect of RCM shall be declared in Table 12.
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Notice
As per Section 46, where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall
be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed.
Late Fees
Section 47 of the CGST Act, 2017 provides,
(1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or
returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for every day during
which such failure continues subject to a maximum amount of five thousand rupees.
(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late
fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a
quarter per cent of his turnover in the State or Union territory.
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Interest
Section 50 of the CGST Act, 2017 provides,
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but
fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the
tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may
be notified by the Government on the recommendations of the Council.
2) The interest under section 50(1) shall be calculated, in such manner as may be prescribed, from the day succeeding the
day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax credit under section 42(10) or undue or excess
reduction in output tax liability under section 43(10), shall pay interest on such undue or excess claim or on such undue or
excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the
Government on the recommendations of the Council.
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Penalties
As per section 122 of the CGST Act, 2017,
(1) Where a taxable person who-
(xi) is liable to be registered under this Act but fails to obtain registration he shall be liable to pay a penalty of ten thousand rupees or
an amount equivalent to the tax evaded whichever is higher.
(2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or
erroneously refunded, or where the input tax credit has been wrongly availed or utilised, -
(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a
penalty of ten thousand rupees or ten per cent of the tax due from such person, whichever is higher;
(b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten
thousand rupees or the tax due from such person, whichever is higher.
(3) Any person who––
(a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1);
(c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows
or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
(e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to
account for an invoice in his books of account,
shall be liable to a penalty which may extend to twenty-five thousand rupees.
As per section 125 of the CGST Act, 2017, any person, who contravenes any of the provisions of this Act or
any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a
penalty which may extend to twenty-five thousand rupees.
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Definition - Section 2(98) of Liability to Pay Tax by the Recipient of supply of goods or services or both instead of the
CGST Act supplier of such goods or services or both under Sec 9(3) or 9(4) of CGST Act
• Recipient of Goods or Services Notified under sec 9(3) or sec 9(4) must be Registere
Registration d under GST - Section 24(iii) of CGST Act
The Recipient after making Payment of GST on RCM basis against generation of Self
Availing ITC invoice is eligible to take ITC subject to Eligibility
RCM Applicable to Composition •The composition scheme registered individuals also come under the reverse charge,
Scheme & on Advance Payment • No credit of RCM be available. RCM also applicable to payments made in Advance
SN Panigrahi
Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 135