Is GST reverse Charge applicable if legal service received by supplier of exempt goods ?

By | August 20, 2018
(Last Updated On: August 20, 2018)

GST reverse Charge applicable if legal service received by supplier of exempt goods ?

Sale of CATTLE FEED is exempt under GST.  So, A person having turnover of 10 crores from sale of cattle feed during last YEAR, is NOT REQUIRED to get himself REGISTERED under GST as per Sec.23(1)(a) of CGST Act 2017 .

If above is yes,then,If the above person who is in business of CATTLE FEED also receives legal services from Advocate amounting to Rs. 80000 during the year. Then whether taking of such services by the person will make him to register his business under GST ?

Compulsory registration in certain cases .

Relevant portion of Section 24 of CGST Act 2017

24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,—

…….

(iii)persons who are required to pay tax under reverse charge;

Reverse Charge meaning under GST Act

As per Section 2(98) of CGST Act 2017 : –

“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3)or sub-section (4)of section 9, or under sub-section (3)or sub-section (4)of section 5 of the Integrated Goods and Services Tax Act;

 Reverse charge

Relevant Portion of Section 9(3) of CGST Act 2017 :

…..

(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.

(4) The central 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.

Comment : If person receive legal services from advocate , then he is liable to pay Tax u/s 9(3) of CGST act as per following Notification No. 13/2017-Central Tax (Rate) Dated 28th June, 2017 Persons liable for reverse Charge on Services u/s 9(3) of CGST Act 

Persons not liable for registration .

Relevant Portion of Section 23 of CGST Act 2017

23. (1) The following persons shall not be liable to registration, namely:—

(a)any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b)an agriculturist, to the extent of supply of produce out of cultivation of land.

(2) The Government may, on the recommendations of the Council, by notification [ note -1 ], specify the category of persons who may be exempted from obtaining registration under this Act.

[Note -1 : For notified persons not liable for registration, see following Notifications :-1

  1. CBEC Seeks to exempt ( from obtaining GST registration ) persons only engaged in making taxable supplies, total tax on which is liable to be paid on reverse charge basis vide Notification No 5/2017 Central Tax  dated 19th June, 2017
  2. Granting exemption from registration to job-workers making inter-State supply of services to a registered person from the requirement of obtaining registration vide Notification No 7/2017  Integrated Tax  Dated 14th September, 2017
  3. Granting exemption to a person making inter-State taxable supplies of handicraft goods from the requirement to obtain registration vide Notification No 8/2017 Integrated Tax Dated 14th September, 2017
  4. Seeks to granting exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration vide Notification No 32/2017 Central Tax Dated 15th September, 2017
  5. Seeks to amend notification no. 32/2017-CT dated 15.09.2017 so as to add certain items to the list of “handicrafts goods” vide Notification No 38/2017 Central Tax Dated 13th October 2017
  6. Seeks to exempt persons making inter-State supplies of taxable services from registration under section 23(2) vide Notification No 10/2017 Integrated Tax Dated 13th October, 2017
  7. Seeks to exempt suppliers of services through an e-commerce platform from obtaining compulsory registration vide Notification No 65/2017 Central Tax Dated 15th November, 2017

Comment :

Thus Section 24 of CGST Act does not override Section 23 of CGST Act , hence ,If the above person who is in business of CATTLE FEED also receives legal services from Advocate amounting to Rs. 80000 during the year, then he is not liable to take GST Registration.

Refer GST Registration : Free Study Material

 

 

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