Levy, Collection of Taxes and

RCM

CA Arun Chhajer
 Levy and Collection of Taxes
There shall be levied a tax called the CGST on all intra-State supplies of goods or services or both, except
on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and
at such rates, not exceeding 20%., as may be notified by the Government on the recommendations of the
Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

Sec 5(1) of IGST Act Subject to the provisions of sub-section (2), there shall be levied a tax called the IGST
on all inter-State supplies of goods or services or both; except on the supply of alcoholic liquor for human
consumption, on the value determined under section 15 of the CGST Act and at such rates, not exceeding
40%, as may be notified by the Government on the recommendations of the Council and collected in such
manner as may be prescribed and shall be paid by the taxable person:

Provided that the integrated tax on goods imported into India shall be levied and collected in accordance
with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said
Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act,
1962.

CA Arun Chhajer
 Petroleum Product – Out of GST

2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified
by the Government on the recommendations of the Council.

Specified petroleum products – Not liable for GST

GST on the supply of following goods shall be levied w.e.f such date as may be notified by the govt. on
the recommendation of the council:-
• Petroleum crude
• High speed Diesel
• Motor Spirit (Commonly known as petrol)
• Natural Gas, and
• Aviation Turbine Fuel

CA Arun Chhajer
 Reverse Charge u/s 9(3) of CGST Act

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.

Reverse Charge means liability to pay the tax is on the person receiving goods/services instead of the
person supplying the goods/services in respect of specified categories of supplies.

CA Arun Chhajer
 Reverse Charge u/s 9(4) of CGST Act

Whether RCM is applicable in today

If you purchase the taxable goods/service from

Unregistered Person value more than 5000

CA Arun Chhajer
 Why RCM is there in Law ?

The object of shifting the burden of payment of GST to the recipient is

not only to widen the scope of levy of tax on various unorganised
sectors, but also to exempt specific classes of suppliers and to tax the
import of services. This is apparent from Sections 9(3), 9(4) and 9(5) of
the CGST Act, Sections 9(3), 9(4) and 9(5) of the Maharashtra Goods
and Services Tax Act, 2017 as well as Sections 5(3), 5(4) & 5(5) of the IGST
Act.

CA Arun Chhajer
 Reverse Charge u/s 9(4) of CGST Act
CT (Rate) IT (Rate)
Notification No 38/2017 dated 13th Oct 2017 Notification No 32/2017 dated 13th Oct 2017
Suspension of RCM from 13th Oct

Current Provision
*(4) The Government may, by notification, specify a class of registered persons who shall, in respect of
supply of specified categories of G /S or both received from an unregistered supplier, pay the tax on RCM
basis as the recipient of such supply of G or S 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 such supply of goods or services or
both.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(4) of CGST Act
NN 07/2019-Central Tax (Rate) Dated: 29th March, 2019
Sl. No. Category of supply of goods and services Recipient of goods and
services
(1) (2) (3)
1 Supply of such G or S or both [other than services by way of grant of development rights, Promoter.
long term lease of land (against upfront payment in the form of premium, salami,
development charges etc.) or FSI (including additional FSI)] which constitute the shortfall
from the minimum value of G or S or both required to be purchased by a promoter for
construction of project, in a financial year (or part of the FY till the date of issuance of
completion certificate or first occupation, whichever is earlier) as prescribed in NN
11/2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id)
against serial number 3 in the Table.

2 Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, Promoter.
[Link]. by Noti. No.24/2019 dated 30.09.2019 w.e.f. 01.10.2019
3 Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, Promoter
1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is
payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against Sr No 3 in
the Table, in notification No.11/2017- Central Tax (Rate), dated 28th June, 2017,

CA Arun Chhajer
 Deemed Supplier of Services – Section 9(5)

(5) The Government may, on the recommendations of the Council, by notification, specify
categories of services the tax on intra-State supplies of which shall be paid by the electronic
commerce operator (ECO) if such services are supplied through it, and all the provisions of this
Act shall apply to such ECO as if he is the supplier liable for paying the tax in relation to the
supply of such services

Means 9(5) Not applicable in case inter state Supply ?

Provided that where an ECO does not have a physical presence in the taxable territory, any
person representing such electronic commerce operator for any purpose in the taxable territory
shall be liable to pay tax:

Provided further that where an ECO does not have a physical presence in the taxable territory
and also he does not have a representative in the said territory, such ECO shall appoint a person
in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

CA Arun Chhajer
 Deemed Supplier of Services – Section 9(5)
Relevant extract of Notification 17/2017 as amended by Notification 17/2021 is provided below (w.e.f. 01.01.2022):

1. services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, omnibus
or any other motor vehicle;

services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
2. commercial places meant for residential or lodging purposes, except where the person supplying such
service through electronic commerce operator is liable for registration under clause (vi) of section 21 of
the UTGST Act, 2017 read with sub-section (1) of section 22 of the said CGST Act.
services by way of house-keeping, such as plumbing, carpentering etc, except where the person
3. supplying such service through electronic commerce operator is liable for registration under sub-section
(1) of section 22 of the said CGST Act.]

4 supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at
specified premises.]

CA Arun Chhajer
Deemed Supplier of Services – Section 9(5)

CA Arun Chhajer
 Reverse Charge - Basic Concept

 Reverse charge under GST is applicable on services as well as on goods

 Liability under reverse charge is absolute the recipient cannot be absolved from his liability even
if tax is paid by the supplier under forward charge.
 The recipient is eligible for input tax credit for the amount paid under reverse charge subject to
the provision contained in sec 16 to sec 18 of the GST Act in respect of eligibility of ITC.
 Supply should be taxable under the GST
 GST under reverse charge shall be paid at the rate applicable to respective goods and services
 There is no threshold limit applicable for reverse charge. It is mandatory registration.

CA Arun Chhajer
 Reverse Charge – Yes / No ?

Assume this Supply is Not Exempt

as per Notification No 12/2017

Whether Recipient need to Located in London

take mandatory therefore Not
Registration as per Section registered in Indian
24(iii) GST

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;
CA Arun Chhajer
 Documentation for Reverse Charge
Section 31. Tax invoice.
(3) Notwithstanding anything contained in sub-sections (1) and (2)––
(f) a registered person who is liable to pay tax u/s 9(3) or 9(4) 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;
(g) a registered person who is liable to pay tax u/s 9(3) or 9(4) shall issue a payment
voucher at the time of making payment to the supplier. [See Rule 52]

CA Arun Chhajer
 Notifications – Sec 9(3)

Notification for Section 9(3) of CGST

Act
• For Goods
• For Services

CA Arun Chhajer
 Reverse Charge for Goods u/s 9(3) of CGST Act
NN 4/2017 - CT(R) Dated 28 June 2017
S.N. Tariff item Description Supplier Recipient
1 0801 Cashew nuts, not shelled or Agriculturist Any registered
peeled person

2 1404 90 10 Bidi wrapper leaves (tendu) Agriculturist Any registered

person
3 2401 Tobacco leaves Agriculturist Any registered
person
3A. 33012400, Following essential oils other than Any Unregistered Person Any Registered Person
33012510, those of citrus fruit namely: -
33012520, a) Of peppermint (Mentha piperita);
33012530, b) Of other mints : Spearmint oil (ex-
33012540 mentha spicata), Water mint-oil (ex-
mentha aquatic), Horsemint oil (ex-
menthasylvestries), Bergament oil (ex-
mentha citrate).

CA Arun Chhajer
 Reverse Charge for Goods u/s 9(3) of CGST Act

NN 4/2017 dated 28th June 2017 of Central Tax (Rate)

S.N. Tariff item Description Supplier Recipient
4 5004 to 5006 Silk yarn Any person who manufactures silk Any registered
yarn from raw silk or silk worm person
cocoons for supply of silk yarn

4A. 5201 Raw cotton Agriculturist Any registered person

5 Supply of lottery State Government, Union Territory Lottery distributor

or any local authority or selling agent.
6. Any Chapter Used vehicles, seized and Central Government, State Any registered person
confiscated goods, old and Government, Union territory or a
used goods, waste and local authority
scrap
7. Any Chapter Priority Sector Lending Any registered person Any registered person
Certificate
CA Arun Chhajer
 Reverse Charge – Yes / No ?
[Link] Tarrif Description of Supply of Goods Supplier of Goods Recipients
item,
6. Any Used vehicles, seized & Central Govt. Any Regd.
NN- Chapter confiscated goods, old & used State Govt. UT or a local Person
37 goods, waste and scrap authority

Located in Delhi but NOT

State Government, Union
registered in GST as
Territory or any local authority
Turnover is only 10 Lacs.
3 Possibilities
1. Whether Recipient need to take mandatory Registration as per Section 24(iii)
2. Whether no GST Applicable on this transaction as recipient is URP
3. Govt will take registration and pay GST
CA Arun Chhajer
Circular No.76/50/2018 dated 31st December, 2018

• A doubt on taxability of Used vehicles, seized etc. made by the Central Government, State
Government, Union territory or a local authority to an unregistered person.

• Supply to an unregistered person is also a taxable supply under GST but is not covered
under notification of reverse charge

• In this regard, it is clarified that the respective Government departments shall be liable to
get registered and pay GST subject to the provisions of sections 22 and 24 of the CGST Act.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

Sl. No. Category of Supply of Services Applicable from vide

Notification Number
1 Supply of Services by a goods transport agency (GTA)
2 Services supplied by an individual advocate including a senior advocate No.13/2017-Central Tax
3 Services supplied by an arbitral tribunal to a business entity. (Rate)] dated: June 28,
st
4 Services provided by way of sponsorship to any body corporate or partnership firm. 2017 w.e.f. 1 July 2017
5 Services supplied by the Central Government
5A Services supplied by the Government by way of renting of immovable property to a NN 03/2018-CT (Rate) dt
registered person 25.01.18
5AA Service by way of renting of residential dwelling to a registered person. NN 05/2022-CT (Rate) dt13.07.22
(w.e.f. 18.7.22)
5B Services supplied by any person by way of transfer of development rights or Floor
Space Index (FSI) (including additional FSI) for construction of a project by a
promoter.
NN 05/2019-CT (Rate) dt
5C Long term lease of land (30 years or more) by any person against consideration in 29.03.19 w.e.f. 01.04.19
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
CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
S.N Category of Supply of Services Notification Number
6 Services supplied by a director of a company or a body corporate to the said
company or the body corporate.
7 Services supplied by an insurance agent to any person carrying on insurance Notification No.13/2017-
business. Central Tax (Rate) Dated:
June 28, 2017 w.e.f. 1st
8 Services supplied by a recovery agent to a banking company or a financial July 2017
institution or a nonbanking financial company.
9 Supply of services by a music composer, photographer, artist or the like
9A Supply of services by an author by way of transfer or permitting the use or NN 22/2019 dated
enjoyment of a copyright 30.09.19 w.e.f. 01.10.19
10 Supply of services by the members of Overseeing Committee to RBI NN 33/2017-CT (Rate)
dated 13.10.2017
11 Services supplied by individual Direct Selling Agents (DSAs) other than a body NN 15/2018-CT
corporate, partnership or limited liability partnership firm to bank or non- (Rate) dated 26.07.18
banking financial company (NBFCs). w.e.f. 27.07.18

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. Category of Supply of Services Applicable from vide
No. Notification Number
12 Services provided by business facilitator (BF) to a banking company
13 Services provided by an agent of business correspondent (BC) to business NN 29/2018-CT
correspondent (BC) (Rate) dt 31.12.18 w.e.f.
14 Security services (services provided by way of supply of security personnel) 01.01.19
provided to a registered person:
15 Services provided by way of renting of any motor vehicle designed to carry
passengers NN 22/19 dt 30.09.19
w.e.f. 01.10.19 and
further Substituted by
NN 29/19 dt 31.12.19

16 Services of lending of securities under Securities Lending Scheme, 1997 NN 22/19 dt 30.09.19
(“Scheme”) of Securities and Exchange Board of India (“SEBI”), as w.e.f. 01.10.19
amended.
CA Arun Chhajer
 Reverse Charge on GTA Service

Recipient of Goods Recipient of Service

Q - GTA from Surat picking the goods from Surat and deliver the goods to Delhi. GTA is unregistered in GST.

Who is recipient of Who is recipient Who will pay IGST / C+S

goods of GTA Service RCM
Scenario – 1  If Freight is being paid
by the Surat, which tax will be paid
under RCM
Scenario – 2  If Freight is being paid
by the Delhi Party, which tax will be
paid under RCM

Further you need to prepare the Self Invoice and Payment Voucher (Rule 52)

CA Arun Chhajer
Can GTA Charge 5% as forward with no ITC & hence
no RCM in the hand of Recipient

1. Before 18.7.2022
2. On or after 18.07.2022

Yes No

CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA)
Who is Goods Transport Agency (GTA )
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA
means any person who provides service in relation to transport of goods by road and issues consignment note,
by whatever name called.

When GTA can opt forward Charge

 Effective from 22nd august 2017 , RCM is not applicable to those GTA service where goods transport agency
has opted the GST under forward charge(NN-22/2017 CT (R) dated 22 august 2017 – GST@12%
 If Recipient is located in the non taxable territory

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
SN Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
1. Supply of Services by a goods transport agency
(GTA) 1[who has not paid central tax at the rate Goods Transport
of 6%,] in respect of transportation of goods by Agency (GTA) (a) Any factory
road to- (b) any society
(c) any co-operative society
Provided that nothing contained in this entry (d) any person registered under GST
shall apply to services provided by a GTA, by (e) any body corporate
way of transport of goods in a goods carriage by (f) any partnership firm or
road, to, - (g) any casual taxable person;
(a) a Dept. or Establishment of the CG or SG or
UT ; or located in the taxable territory.
(b) local authority; or
(c) Governmental agencies,
which has taken registration under GST Act only
for TDS u/s 51 and not for making a taxable
supply of G or S

CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA)

[Provided further that nothing contained in this entry shall apply where, -

i. the supplier has taken registration under the CGST Act, 2017 and
exercised the option to pay tax on the services of GTA in relation to
transport of goods supplied by him under forward charge; and

ii. the supplier has issued a tax invoice to the recipient charging Central
Tax at the applicable rates and has made a declaration as prescribed
in Annexure III on such invoice issued by him.]

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
[Annexure III
Declaration
I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of
GTA in relation to transport of goods supplied by us during the Financial Year _____ under forward charge.]

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

As per proviso If GTA Provide the service to CG SG UT etc. who has taken registration for TDS under
GST then RCM not applicable

Now question is who is liable to pay tax as

Supplier i.e. GTA Exempted Recipient RCM

Exemption Notifications
S. No HSN Particular
21B 9965 Services provided by a goods transport agency, by way of transport of goods in a goods carriage, to, -
/
(a) a Department or Establishment of the Central Government or State Government or Union territory; or
9967 (b) local authority; or
(c) Governmental agencies,

which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the
purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services
CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA)
Q – What will happen if the GTA is providing the service to unregistered person?
Solution - Entry No. 21A has been inserted in the exemption notification with effect from 13 Oct’17 to exempt
services provided by the GTA to unregistered person

[Link]. HSN Recipient of Service

21A 9965 Service provided by GTA to unregistered person including an unregistered casual
or taxable person other then following recipient namely -
9967 (a) Any factory registered under or governed by the Factory Act, 1948,, or
(b)Any society registered under the Societies Registration Act, 1860 or
(c) Any cooperative society
(d) Any Partnership Firm
(e) Any body corporate
(f) Any casual taxable person
Located in the taxable territory (This word is missing, So it can cover abroad
transaction as well)

CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA)

Service Provided by Temp Owner – where no Consignment note?

If Driver of goods carriage is self employed either by taking vehicle
on rent from other or as owner of vehicle and does not issue the
consignment note.
Q1 – is it GTA?
Q2 –Total Charges of Transportation of Goods through Auto is Rs 50 Lacs
then who will pay GST?
Exemption Notifications
S. No HSN Particular
18 9965 Service by way of transportation of goods –
(a) By Road except the service of
 a Goods Transport agency and
 A courier agency
(b) By Inland waterways

CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA) - Exemption

S. No HSN Particular
21 9965 Services provided by a GTA, by way of transport in a goods carriage of -
/ a) agricultural produce;
9967 b) Goods, where consideration charged for the transportation of goods on a consignment transported in a single
carriage does not exceed Rs 750;
c) Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed
Rs 1500; (This matter deleted by NN 04/2022-CT Rate dated 13.07.2022 w.e.f. 18.07.2022)
d) milk, salt and food grain including flour, pulses and rice;
e) organic manure;
f) newspaper or magazines registered with the Registrar of Newspapers;
g) relief materials meant for victims of natural or man-made disasters, calamities, accidents
or mishap; or
h) defence or military equipment's

If GTA transporting Branded Rice then will it be exempted because Branded Rice is Taxable in GST

CA Arun Chhajer
Analysis of Goods Transport Agency (GTA) - Exemption

Whether Transportation of Exempted Item will be exempted from RCM Liability

CA Arun Chhajer
 Analysis of Goods Transport Agency (GTA) - Exemption
S. No HSN Particular
19 9965 Services by way of transportation of goods by an aircraft from a place outside India upto the customs
station of clearance in India.
19A 9965 Services by way of transportation of goods by an aircraft from customs station of clearance in India to a
place outside India.

Condition - Nothing contained in this serial number shall apply after the 30th day of September, [2022].
19B 9965 Services by way of transportation of goods by a vessel from customs station of clearance in India to a
place outside India.

Nothing contained in this serial number shall apply after the 30th day of September, [2022].
22 (a)….
(b) service by way of giving on hire to a goods transport agency, a means of transportation of
goods.

CA Arun Chhajer
 Goods Transport Agency (GTA) - Intra / Inter State Supply
Inter State or Intra State
Sec 7 of IGST Act – Inter State  LOS and POS are in 2 different state/UT
Sec 8 of IGST Act - Intra State  LOS and POS are in same state.

POS of services provided by way of Transportation of goods (including by mail or courier to) [Sec.
12(8)]

Registered Person – Location

of Such person

Unregistered Person –
location at which such goods
are handed over
CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
2 Services supplied by an individual An individual Any business entity
advocate including a senior advocate including located in the taxable
advocate by way of legal service a senior advocate territory.
directly or indirectly. or firm of
advocates.
3 Services supplied by an arbitral An arbitral tribunal. Any business entity
tribunal to a business entity. located in the taxable
territory.

As per Section 2(n) as inserted vide Notification No 12/2017 “business entity” means any
person carrying out business;

CA Arun Chhajer
Reverse Charge for Services u/s 9(3) of CGST Act

Whether Advocates need to take

registration mandatorily in any
situations in GST?

CA Arun Chhajer
 Reverse Charge – Yes / No ?

Supply is Exempt
as per Notification No 12/2017, Sr No 45

Not Registered in
GST

3 Possibilities
1. Whether Recipient need to take mandatory Registration as per Section 24(iii)
2. Whether no GST Applicable on this transaction as recipient is URP
3. Will Advocates need to take registration and pay GST?
CA Arun Chhajer
 Reverse Charge – Yes / No ?

Whether Recipient need to take

mandatory Registration as per
Section 24(iii)

Located in London therefore Not

registered in Indian GST

3 Possibilities
1. Whether Recipient need to take mandatory Registration as per Section 24(iii)
2. Whether no GST Applicable on this transaction as recipient is URP
3. Will Advocates need to take registration and pay GST?

CA Arun Chhajer
 Reverse Charge – Yes / No ?

Company has surrender its GSTIN in 18-19 and

in 19-20 applied for Liquidation. Bill of Advocate
– Rs 2 Lac

3 Possibilities
1. Whether Recipient need to take mandatory Registration as per Section 24(iii)
2. Whether no GST Applicable on this transaction as recipient is URP
3. Will Advocates need to take registration and pay GST?

CA Arun Chhajer
 Legal Service/Tribunal Services - Exemption
Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate)
SI SAC Description of Services
45 Headi Services provided by
ng (a) an arbitral tribunal to –
9982 (i) any person other than a business entity; or
or (ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it
Headi eligible for exemption from registration under the CGST Act, 2017; .
ng (iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or
9991 Government Entity (CG,SG,UT,LA GA or GE)
(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 such amount in the preceding financial year as makes it
eligible for exemption from registration under the CGST Act, 2017; .
(iv) the CG,SG,UT,LA GA or GE
(c) a senior advocate by way of legal services to
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it
eligible for exemption from registration under the CGST Act, 2017; .
(iii) the CG,SG,UT,LA GA or GE
CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

Meaning of Legal Legal form of Advocates is providing the retainer

Service – Only
ship services for GST Compliances?
representation
Service or every
service? Will this is under RCM or Forward Charge

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

Meaning of
Legal Service –
Only
representation
Service

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
4. Services provided by way of sponsorship to any Any person Any body corporate or partnership
body corporate or partnership firm. firm located in the taxable territory.

Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate) – Exemption

SI SAC Description of Services
53 Heading
9985 Services by way of sponsorship of sporting events organised -
(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals
represent any district, State, zone or Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All
India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
5. Services supplied by the CG, SG, UT or a LA to a business entity Central Government, State Any business entity located in
excluding, - Government, Union territory the taxable territory
1. Renting of immovable property, and or local authority (CG, SG, UT
2. Services specified below- or a LA)
• services by Department of Posts by way of speed post,
express parcel post, life insurance, and agency services
provided to a person other than CG,SG or UT;
• services in relation to an aircraft or a vessel, inside or outside
the precincts of a port or an airport;
• transport of goods or passengers.
5A. Services supplied by the CG, SG, UT or a LA by way of renting ofCentral Government, State Any person registered under
immovable property to a person registered under the CGST Act,Government, Union territory the CGST Act, 2017
2017 or local authority (CG, SG, UT
NN 03/2018-CT (Rate) dated 25.01.2018 or a LA)

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Transaction - Renting of Immovable Property

Supplier GST Registered Recipient GST Registered Amount RCM/FC/No

Tax
1 Govt Reg Pvt Co Reg 21 Lacs
2 Govt URP Pvt Co URP 21 Lacs
3 Pvt Ltd URP Pvt Co Reg 19 Lacs
4 Pvt Ltd URP Pvt Co Reg 21 Lacs

CA Arun Chhajer
 Govt. Services - Exemption
Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate)
SI SAC Description of Services
4 99 Services by 6[Central Government, State Government, Union territory, local authority or] governmental
authority by way of any activity in relation to any function entrusted to a municipality under article 243W of
the Constitution.
5 99 Services by a 7[8[Central Government, State Government, Union territory, local authority or] Governmental
Authority] by way of any activity in relation to any function entrusted to a Panchayat under article 243G of
the Constitution.
6 99 Services by the Central Government, State Government, Union territory or local authority excluding the
following services-
(a) services by the Department of Posts 82[by way of speed post, express parcel post, life insurance, and
agency services provided to a person other than the Central Government, State Government, Union
territory]; (This matter deleted by NN 04/2022-CT Rate dated 13.07.2022 w.e.f. 18.07.2022)
(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(c) transport of goods or passengers; or
(d) any service, other than services covered under entries (a) to (c) above, provided to business entities

CA Arun Chhajer
 Govt. Services - Exemption
Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate)
SI SAC Description of Services
7 99 Services provided by the Central Government, State Government, Union territory or local authority to a
business entity with an aggregate turnover of up to 9[such amount in the preceding financial year as makes
it eligible for exemption from registration under the CGST Act

Explanation.- For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be
applicable to-
(a) services,-
(i) by the Department of Posts 83[by way of speed post, express parcel post, life insurance, and agency
services provided to a person other than the Central Government, State Government, Union territory];
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) of transport of goods or passengers; and

(b) services by way of renting of immovable property.

CA Arun Chhajer
 Govt. Services - Exemption
Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate)
SI SAC Description of Services
8 99 Services provided by the Central Government, State Government, Union territory or local authority to
another Central Government, State Government, Union territory or local authority:
Provided that nothing contained in this entry shall apply to services-
(i) by the Department of Posts [by way of speed post, express parcel post, life insurance, and agency
services provided to a person other than the Central Government, State Government, Union territory];
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) of transport of goods or passengers.
9 99 Services provided by Central Government, State Government, Union territory or a local authority where the
consideration for such services does not exceed five thousand rupees:
Provided that nothing contained in this entry shall apply to-
(i) services by the Department of Posts 85[by way of speed post, express parcel post, life insurance, and
agency services provided to a person other than the Central Government, State Government, Union
territory];
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers:
Provided further that in case where continuous supply of service, as defined in section 2(33) is provided by
the CG, SG, UT or a local authority, the exemption shall apply only where the consideration charged for such
service does not exceed five thousand rupees in a financial year.
CA Arun Chhajer
 Govt. Services - Exemption
SI SAC Description of Services
9C 99 Supply of service by a Government Entity to CG, SG, UT, LA or any person specified by CG, SG, UT or LA
against consideration received from CG, SG, UT or LA, in the form of grants.
9D 99 Services by an old age home run by CG, SG or by an entity registered under section 12AA 12AB of the
Income-tax Act, to its residents (aged 60 years or more) against consideration upto Rs 25,000 per month per
member, provided that the consideration charged is inclusive of charges for boarding, lodging and
maintenance.
17 Heading Service of transportation of passengers, with or without accompanied belongings, by-
9964 (a) railways in a class other than-
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located in
India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).

41[Provided
that nothing contained in items (e) above shall apply to services supplied through an electronic
commerce operator, and notified under section 9(5) of the CGST Act

CA Arun Chhajer
 Govt. Services - Exemption
SI SAC Description of Services
42 9973 Allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the period
9991 prior to the 1st April, 2016, on payment of licence fee or spectrum user charges, as the case may be.
47 9983 / (a) registration required under any law for the time being in force;
9991 (b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at
large, including fire license, required under any law for the time being in force ……..(Example – Boiler Certification
Fees)
61 9991 Issuance of passport, visa, driving licence, birth certificate or death certificate.
62 9991/ Tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to
9997 the CG, SG, UT or LA under such contract.
63 9991 Assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all life forms of
animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products

64 9973/9 assignment of right to use any natural resource where such right to use was assigned by the CG, SG, UT or LA before the
991 1st April, 2016:
Provided that the exemption shall apply only to tax payable on one time charge payable, in full upfront or in installments,
for assignment of right to use such natural resource
65 9991 deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to
import export cargo on payment of Merchant Overtime charges

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST
Act
new entry 5AA of Notification No 13/2017 Central Tax Rate (inserted vide NN 05/2022-CT dated 13.07.22 (Effective from
18.07.2022)

Sl. No. Category of Supply of Services Supplier of service Recipient of Service

(1) (2) (3) (4)

Service by way of renting of residential

5AA Any person Any registered person.
dwelling to a registered person.

If all the below conditions are satisfied then recipient will pay the tax under reverse charge as per
1. Property is residential dwelling
2. Use is not relevant (Commercial purpose or residential purpose)
3. Property has been taken on rent in relation to business (whether for official or for
employee) and not for personal
4. Supplier (Landlord) can be any person (registered or not) and
5. Recipient (Tenant) is registered under GST

CA Arun Chhajer
 Govt. Services - Exemption
Notification No 12/2017 dated 28 June 2017 of Central Tax (Rate)

SI SAC Description of Services

12 Heading 9963 or Services by way of renting of residential dwelling for use as residence [except where the residential
Heading 9972 dwelling is rented to a registered person]. Inserted by NN 04/2022-CT Rate dated 13.07.2022 w.e.f.
18.07.2022

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST
Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
5B. Services supplied by any person by way of transferAny person Promoter.
of development rights or Floor Space Index (FSI)
(including additional FSI) for construction of a
project by a promoter.

NN 5/2019-CT (Rate) dated 29.03.19 w.e.f. 01.04.19

5C. Long term lease of land (30 years or more) by anyAny person Promoter]
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.
NN 5/2019-CT (Rate) dated 29.03.19 w.e.f. 01.04.19

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
6. Services supplied by a director of a company or aA director of a companyThe company or a body corporate
body corporate to the said company or the bodyor a body corporate located in the taxable territory.
corporate.

Circular No: 140/10/2020 – GST - dated the 10th June, 2020

Clarification in respect of levy of GST on Director’s remuneration - Reg.

Para 5.3. it is clarified that the part of Director‟s remuneration which are declared as “Salaries‟ in the books
of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for
services by an employee to the employer in the course of or in relation to his employment in terms of
Schedule III of the CGST Act, 2017.

Para 5.4 It is further clarified that the part of employee Director’s remuneration which is declared separately
other than “salaries‟ in the Company’s accounts and subjected to TDS under Section 194J of the IT Act as Fees
for professional or Technical Services shall be treated as consideration for providing services which are
outside the scope of Schedule III of the CGST Act, and is therefore, taxable.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST
Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
7. Services supplied by an insurance agent to any personAn insurance agent Any person carrying on insurance
carrying on insurance business. business, located in the taxable
territory.
8. Services supplied by a recovery agent to a bankingA recovery agent A banking company or a financial
company or a financial institution or a nonbanking institution or a NBFC, located in the
financial company. taxable territory.
9. Supply of services by a music composer, photographer,Music composer,Music company, producer or the like,
artist or the like by way of transfer or permitting thephotographer, artist,located in the taxable territory.
use or enjoyment of a copyright covered under clauseor the like
(a) of sub-section (1) of section 13 of the Copyright Act,
1957 relating to original dramatic, musical or artistic
works to a music company, producer or the like.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
9A. Supply of services by an author by way of transferAuthor Publisher located in the taxable
or permitting the use or enjoyment of a copyright territory:
covered under clause (a) of sub-section (1) of Provided that nothing contained in
section 13 of the Copyright Act, 1957 relating to this entry shall apply where, - *
original literary works to a publisher.

NN 22/2019 dated 30.09.2019 w.e.f. 01.10.2019

*(i) the author has taken registration under the CGST Act, 2017 and filed a declaration, in the form at Annexure
I, within the time limit prescribed therein, with the jurisdictional CGST or SGST commissioner, as the case may
be, that he exercises the option to pay central tax on the service specified in column (2), under forward charge
in accordance with Section 9 (1) of the CGST Act, 2017 under forward charge, and to comply with all the
provisions CGST Act, 2017 as they apply to a person liable for paying the tax in relation to the supply of any
goods or services or both and that he shall not withdraw the said option within a period of 1 year from the date
of exercising such option;

(ii) the author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I
to the publisher.
CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
[Annexure I]
FORM
(9A of Table)
(Declaration to be filed by an author for exercising the option to pay tax on the “supply of services by an author
by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1)
of section 13 of the Copyright Act, 1957 relating to original literary works to a publisher” under forward charge
on or before 31.10.2019 for the option to be effective from 1.11.2019 or before the commencement of any
Financial Year for the option to be effective from the commencement of that Financial Year.)

Reference No. ___________________

Date ____________
To
____________________
____________________
____________________
(To be addressed to the jurisdictional Commissioner)
1. Name of the author:
2. Address of the author:
3. GSTIN of the author:

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Declaration

1. I have taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and I hereby
exercise the option to pay central tax on the service specified against serial No. 9A in column (2) of the
Table in the notification No.13/2017-Central Tax (Rate), dated the 28th June, 2017, supplied by me, under
forward charge in accordance with section 9 (1) of CGST Act, and to comply with all the provisions of CGST
Act, 2017 (12 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any
goods or services or both;

2. I understand that this option, once exercised, shall not be allowed to be changed within a period of 1 year
from the date of exercising the option and shall be valid, at least, till the end of Financial Year following the year
in which it is made.
Signature ___________________
Name _______________________
GSTIN _________________
Place __________________
Date __________________

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Annexure II
(Declaration to be made in the invoice by the author exercising the option to pay tax on the “supply of service
by an author by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of
sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary works to a publisher” under
forward charge.)

Declaration

(9A of Table)
I have exercised the option to pay central tax on the service specified against serial No.9A in column (2) of the
Table in the notification No.13/2017-Central Tax (Rate), dated the 28th June, 2017 under forward charge.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. Category of Supply of Services Supplier of service Recipient of Service
No.
(1) (2) (3) (4)
10. Supply of services by the members of Overseeing Committee to Members of Overseeing Reserve Bank of India]
Reserve Bank of India Committee constituted by
the Reserve Bank of India
NN 33/2017-CT (Rate) dated 13.10.2017
11. Services supplied by individual Direct Selling Agents (DSAs) other Individual Direct Selling A banking company or
than a body corporate, partnership or limited liability partnership Agents (DSAs) other than a a non-banking financial
firm to bank or non-banking financial company (NBFCs). body corporate, company, located in the
NN 15/2018-CT(Rate) dated 26.07.18 w.e.f. 27.07.18 partnership or limited taxable territory.]
liability partnership firm.
12. Services provided by business facilitator (BF) to a banking Business facilitator (BF) A banking company,
company located in the taxable
NN 15/2018-CT(Rate) dated 26.07.18 w.e.f. 27.07.18 territory
13. Services provided by an agent of business correspondent (BC) to An agent of business A business
business correspondent (BC). correspondent (BC) correspondent, located
NN 15/2018-CT(Rate) dated 26.07.18 w.e.f. 27.07.18 in the taxable territory.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

Sl. No. Category of Supply of Services Supplier of service Recipient of

Service
(1) (2) (3) (4)
14. Security services (services provided by way of supply of security Any person other A registered
personnel) provided to a registered person. than a body person, located in
corporate the taxable
Provided that nothing contained in this entry shall apply to, - territory.
(i)
(a) a Dept. or Establishment of CG or SG or UT ; or
(b) local authority; or
(c) Governmental agencies;
which has taken registration only for the purpose of deducting
tax u/s 51 and not for making a taxable supply of goods or
services; or

(ii) a registered person paying tax under section 10 of the said

Act.

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act

Nature of Service – Rs Supplier Recipient RCM – Yes / No

21 Lacs P.A.
1. Security Services XYZ P Ltd – GST Mr A – GST Registered
Registered
2. Housekeeping Mr A – GST Registered ABC P Ltd – GST Registered
Services
3. Manpower XYZ Ltd -GST Registered ABC P Ltd – GST Registered
4. Security Services Mr A – unregistered ABC P Ltd – GST Registered
5. Security Services Mr A – unregistered ABC P Ltd – GST
UnRegistered
6. Security Services XYZ Partnership Firm– Mr A – GST Registered
GST Registered

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
Sl. No. Category of Supply of Services Supplier of service Recipient of Service
(1) (2) (3) (4)
15. Services provided by way of renting of any motor Any person, other than a Any body corporate located in the
vehicle designed to carry passengers where the body corporate who taxable territory.
cost of fuel is included in the consideration supplies the service to a
charged from the service recipient, provided to a body corporate and does Circular No.130/49/2019-GST Dated:
body corporate. not issue an invoice 31st December, 2019
charging central tax at
NN 22/2019 dated 30.09.2019 w.e.f. 01.10.2019 the rate of 6 per cent. to
and further Substituted by NN 29/2019 sdated the service recipient
31.12.2019
16. Services of lending of securities under Securities Lender i.e. a person who Borrower i.e. a person who borrows
Lending Scheme, 1997 (“Scheme”) of Securities deposits the securities the securities under the Scheme
and Exchange Board of India (“SEBI”), as amended. registered in his name or through an approved intermediary of
in the name of any other SEBI.”.
NN 22/2019 dated 30.09.2019 w.e.f. 01.10.2019 person duly authorised
on his behalf with an
approved intermediary
for the purpose of
lending under the
Scheme of SEBI
CA Arun Chhajer
Reporting of RCM Transaction in GSTR 1

CA Arun Chhajer
 Reporting of RCM Transaction in GSTR 1

Q – When Intra State Supply attract IGST ?

CA Arun Chhajer
 When Intra State Supply attract IGST under Reverse Charge
Q – When Intra State Supply attract IGST under Reverse Charge?

Circular No. 93/12/2019-GST 8th March, 2019

It is further clarified that nature of supply of PSLC between banks may be treated as a supply of goods in the course of
inter-State trade or commerce. Accordingly, IGST shall be payable on the supply of PSLC traded over e-Kuber portal of RBI
for both periods i.e 01.07.2017 to 27.05.2018 and from 28.05.2018 onwards.
However, where the bank liable to pay GST has already paid CGST/SGST or CGST/UTGST as the case may be, such banks for
payment already made, shall not be required to pay IGST towards such supply.

Circular No. 119/38/2019-GST dated 11th October 2019

Subject: Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997 – reg.
5.1 For the past period i.e. from 01.07.2017 to 30.09.2019, GST is payable under forward charge by the lender and request
may be made by the lender (supplier) to SEBI to disclose the information about borrower for discharging GST under
forward charge. The nature of tax payable shall be IGST. However, if the service provider has already paid CGST / SGST /
UTGST treating the supply as an intra-state supply, such lenders shall not be required to pay IGST again in lieu of such GST
payments already made.
5.2 With effect from 1st October, 2019, the borrower of securities shall be liable to discharge GST as per Sl. No 16 of
Notification No. 22/2019-Central Tax (Rate) dated 30.09.2019 under reverse charge mechanism (RCM). The nature of GST
to be paid shall be IGST under RCM

CA Arun Chhajer
 Reverse Charge for Services u/s 9(3) of CGST Act
In Case if SEZ is receiving the Security Service from other than body corporate then
1. RCM will be applicable and SEZ unit to pay Tax and get the Refund later or
2. It will under Forward Charge

Page No 483 – CBIC FAQ – 3rd Edition – 15.12.2018

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Reverse Charge for Services u/s 9(3) of CGST Act

CA Arun Chhajer
 Reverse Charge in respect .of Service only under IGST
NN 10/2017 – IT (Rate) dated 28 June 2017
SI Category of Services Supplier of Recipient of Service
No Service
1 Any service supplied by any person who is located in Any person Any person located in
a non-taxable territory to any person (other then located in Non Taxable territory
non-taxable online recipient) Taxable territory

Sec 2(16) of IGST Act “Non- Taxable Online Recipient” means any Government, local authority,
governmental authority, an individual or any other person not registered and 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.

Explanation.––For the purposes of this clause, the expression “governmental authority” means an authority
or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with 90% or more participation by way of equity or control, to carry out
any function entrusted 1[to a Panchayat under article 243G or] to a municipality under article 243W of the
Constitution;
CA Arun Chhajer
 Reverse Charge in respect .of Service only under IGST
Sec 2(17) of IGST Act “online information and database access or retrieval services” means 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 and involving minimal human intervention and impossible
to ensure in the absence of information technology and includes electronic services such as,–
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks
or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a
computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;

CA Arun Chhajer
 Reverse Charge for Services under IGST Only
EXEMPTION Notification No 9/2017 –Integrated Tax Rate dated 28th June ‘17

SI No HSN Particular
10 Chapt Services received from a provider of service located in a non- taxable territory by –
er 99 (a) the CG. SG, UT, LA , a governmental authority or an individual in relation to any
purpose other than commerce, industry or any other business or profession;

(b) Entity registered under section 12AA of the Income-tax Act, 1961 for the purposes
of providing charitable activities; or

(c) A person located in a non-taxable territory:

Provided that the exemption shall not apply to –

(i) OIDAR services received by persons specified in entry (a) or entry (b); or
(ii) services by way of transportation of goods by a vessel from a place outside India up
to the customs station of clearance in India received by persons specified in the entry.

CA Arun Chhajer
 Case Study on Import of Service

Import of Service Recipient Purpose Whether it is If Taxable

Taxable? then FC /
RCM
Not OIDAR URP Personal
Not OIDAR URP Business
OIDAR RP Business
OIDAR URP Personal V Imp

OIDAR URP Business

CA Arun Chhajer
 Reverse Charge for Services under IGST Only
NN 10/2017 – IT (Rate) dated 28 June 2017

SI Category of Services Supplier of Recipient of Service

No Service
10 Services supplied by a person located in non- A person Importer, as defined in clause
taxable territory by way of transportation of located in non- (26) of sec 2 of the customs
goods by a vessel from a place outside India up taxable act, 1962, located in the
to the customs station of clearance in India. territory taxable territory.

Explanation 4 of NN 8/2017- IT (Rate) dt 28 June 2017 read with Corrigendum dated 30 June 2017 w.e.f.
1 July 17
“4. where the value of taxable service provided by a person located in non-taxable territory to 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 is not available with the person liable for paying
integrated tax, the same shall be deemed to be 10% of the CIF value (sum of cost, insurance and
freight) of imported goods.”

CA Arun Chhajer
 Judgment

IGST cannot be imposed on deemed ocean freights in the case of imports on CIF contracts.

Mohit Minerals Pvt. Ltd. v/s UOI (Gujarat High Court)

 The Gujarat HC held that chargeable section must be given a strict interpretation. The Importers of goods cannot be
deemed to be covered within the scope of the term “recipient” as stipulated in Section 5 (3) of the IGST Act, therefore
entry 10 of Notification No. 10/2017 fastening tax liability on the importer is ultra vires.
 Article 265 does not entitle delegated legislation to impose the tax in the absence of express legislative provision. Thus,
it is unconstitutional.
 The Revenue has erred in treating importers as recipient of services as the services are actually received by the foreign
exporter. The Indian importers were not even liable to pay consideration to the foreign shipping lines and hence, cannot
be held liable to pay tax on such services. A beneficiary of services cannot be said as a recipient of service.
 The claim that payment of IGST is revenue neutral on account of ITC eligibility with the importer is not valid in as much
as the importer does not qualify as recipient of services and therefore cannot avail ITC of the IGST so paid
 The mere fact that the transportation of goods terminates in India, will not make such supply of transportation of goods
as taking place in India.
 The place of supply rules are proxies to determine inter-state or inter-state nature of the supply and can make a supply
taxable which is not in the taxable territory

CA Arun Chhajer
Case Study

CA Arun Chhajer
 Case Study

Freight paid by Indian Entity to foreign agent for shipment of export of

goods is attract GST for exporter.

Please suggest

CA Arun Chhajer
Case Study

CA Arun Chhajer
 Case Study
We, a Private Limited Company, are working as Custom broker cum CHA and provide services to
our clients for forwarding of consignments. We usually make payment of shipping charges on
behalf of customers as Air freight and ocean freight to shipping line which do not have any PE in
India (in foreign currency) and after paying to the party same is charged to our clients in our bill
with GST charged in our bill. As per notification no 10/2017 dated 28.06.2017, any services
supplied by any person who is located in an non-taxable territory to any person other than non-
taxable online recipient, RCM is payable by person located in taxable territory.

Currently we are not paying any RCM under GST on this kind of service.

Clarification needed whether we have to pay RCM on these services or not? And if payable, at
what rate it should be paid?

Also we are charging to our customers as:

CA Arun Chhajer
• Importer appointing freight forwarder on principal to principal basis:
• Here, freight forwarder is responsible to undertake all necessary formalities for clearance
of goods at agreed lump-sum consideration. The shipping line raises bill on freight
forwarder who recovers from the importer as a part of the package offered. Service receive
in respect of transportation services would be freight forwarder and he needs to pay GST
under reverse charge on the ocean freight charges.
• Importer appointing Customs House Agent (CHA) for making customs clearance:
• CHA is appointed by importer who undertakes all customs formalities. It enters into
contract with all agencies acting as agent of importer. Charges paid to different vendors are
claimed as reimbursement from importer. In addition, separate agency charge is also
recovered.

CA Arun Chhajer
CA Arun Chhajer