Does the RCM Apply


Rahmathullah p   24 June 2019

Rahmathullah p

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My Client is a Government Contractor,

I auctioned the car at the District Collector's office,
Currently it has to pay GST, how to pay,
Can I pay in *RCM mode?*

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RAKESH ISHI (Tax Assistant)     24 June 2019

RAKESH ISHI
Tax Assistant 
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Question asked is not complete with relevant facts and details for relevant solutions.

 

Reverse Charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. In the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.

There were three type of reverse charge scenarios provided in GST regime at the time of introduction. First is, dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/ SGST (UTGST) Act and section 5 (3) of the IGST Act. Second scenario is, covered by section 9 (4) of the CGST/SGST (UTGST) Act and section 5 (4) of the IGST Act where taxable supplies by any unregistered person to a registered person was being covered.

Now, There is a change in second scenario, where only notified goods and services shall be covered if, supplied by any unregistered person to a registered person. Third scenario is only applicable to E-commerce operators. This scenario is being covered by Section 9(5) of the CGST/SGST (UTGST) Act and section 5 (5) of the IGST Act.

If the supply involves taxable goods or services then reverse charge shall be applicable while If the supply involves exempted goods or services then reverse charge shall not be applicable.

GST is essentially a tax only on commercial transactions. Hence, only those supplies that are in the course or furtherance of business qualify as supply under GST. Hence, any supplies made by an individual in his personal capacity do not come under the ambit of GST unless they fall within the definition of business as defined in the Act.

Sale of personal used car by an individual will not attract GST (neither in the hands of buyer nor seller) because it is not covered within the meaning & scope of supply, since the element of 'furtherance of business' test is missing.


If more details provided, might be helpful to advise solution.

 

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Rahmathullah p   24 June 2019

Rahmathullah p

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My client is a Government Contractor,
He picked up a car at an auction at the District Collector's office.
At present, the office advises that GST should be paid for it. How to pay, in RCM mode?

avater

Pankaj Rawat (GST Practitioner)     24 June 2019

Pankaj Rawat
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Dear Rahmatullah P

As per Notification 36/2017 CT (R) , supply of Used Vehicle by Central Government, State
Government, Union territory or a local
authority to any registered person, would
be subject to GST on reverse charge basis
as per which tax is payable by the
recipient of such supplies.
And if Recipient is Unregistered, then Supplier is liable to pay GST on same .

For more details can refer circular 76/50/2018 GST

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