RCM on Advocate services by unregistered perosn

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This discussion explores whether an unregistered entity receiving advocate services liable under Reverse Charge Mechanism (RCM), exceeding the GST registration threshold, is required to register and pay GST. While Section 24(iii) of the CGST Act suggests compulsory registration for those liable to pay tax under RCM, the discussion also highlights exemptions for legal services under Notification No. 12/2017. The interpretation leans towards the service recipient not being liable for registration if the RCM services received are exempt, though expert opinions are welcomed.

Ketan Mehta

Ketan Mehta (Querist)

30 November 2024 One of unregistered Entity has received services liable under RCM ( which is greater than threshold limit of GST registration) , does unregistered vendor has to pay the RCM and take the registration?

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)

30 November 2024 As Section 24(iii) of CGST Act,
Section 24. Compulsory registration in certain cases.-

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;

IMHO , you are liable to get register

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

30 November 2024 In exercise of the powers conferred by sub-section (3) of section 9 of the CGST Act, 2017, the Government has issued a Notification No. 13/2017 – Central Tax (Rate) dated 28th June, 2017 regarding list of services under RCM. Entry No. 2 of the said RCM Notification is concerned with ‘Legal Service’. “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. In regard to the aforesaid mentioned Entry No. 2 a clarification regarding, inter alia, legal services was issued vide Circular No. 27/01/2018-GST dated 04.01.2018– Reverse Charge.

The Government has issued a Notification No. 12/2017 – Central Tax (Rate) dated 28th June, 2017 [Exemption Notification] regarding exemption of various services. Entry No. 45(b) of the said Exemption Notification is concerned with exemption to ‘Legal Service’. As follows...
(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. Rate NIL Condition NIL.

Section 2(6) of CGST Act. Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis.
As such The service recipient is not liable to register based on services received under RCM while these are exempt under exemption notification.
These is my interpretation, experts views are welcome.

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