GST Reverse Charge in case of Supply of Goods and Services

Following essential oils other than those of citrus fruit namely: –

(a) Of peppermint (Mentha piperita);

(b) Of other mints: Spearmint oil (ex-menthaspicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha sylvestris), Bergament oil (ex-mentha citrate).

Explanation.—For the purposes of this entry, 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 provisions of sub-section (1) of section 11 of the Lotteries (Regulation) Act, 1998 (17 of 1998).

Payment of GST @ 5%(2.5%+2.5%) under RCM and no ITC to the GTA

Payment of GST @12% (6%+6%) under NCM with ITC to the GTA

a. Any factory registered under or governed by the Factories Act, 1948 (63 of 1948); or

b. Any society registered under the Societies Registration Act, 1860 (21 of 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 the CGST Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax 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.

a. a Department or Establishment of the Central Government or State Government or Union territory; or

b. local authority; or

c. Governmental agencies

which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.

Goods Transport Agency as defined in Para 2(ze) of N/N 12/2017- Central Tax (Rate) means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

Issue: Whether legal services other than representational services provided by an individual advocate or a senior advocate to a business entity are liable for GST under reverse charge mechanism?

Clarification: Yes. In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity.

a. Renting of immovable property

b. Services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;

c. Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport.

d. Transport of goods or passengers.

Therefore, it is important to analyze if the licensing is a leasing/rental service. It is clear that what is supplied by the Government is the LEASE (meaning thereby it is a service and not merely the statutory payment for no activity done) of the right to extract and use mineral ores and that is not covered by any specific entries in the Serial No. 17 of the Notification and hence falls under the residual entry. Upto the amendment of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 by the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, the tax rate for the above service is fixed at the rate of tax which was applicable on supply of like goods involving transfer of title in goods. But after the amendment by the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, leasing or renting of goods and leasing or rental of services have been placed under separate item numbers under Serial Number 17 of the Notification. Accordingly, the leasing or renting of goods was made taxable at the rate of tax which was applicable on supply of like goods involving transfer of title in goods and all other leasing or rental services have been made taxable at 9% CGST. Since the transaction of the applicant is not leasing of goods but license to extract and use mineral ore, WHICH INVOLVES LEASING OF LAND, the transaction is covered under the residual Entry (viii) of Serial Number 17 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 as amended by the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 and is taxable at 9% CGST. Hence, Leasing of the Government land to the applicant to carry out the activity of the mining is a supply of service to the applicant. Therefore, regarding the question who is liable to pay the above tax, Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017 stipulates in Serial No. 5, that the tax leviable under Section 9 of the CGST Act shall be paid on reverse charge basis by the recipient of such services- Naren Rocks and Mines Pvt. Ltd., In re [2019] 110 taxmann.com 280/ 31 GSTL 122/[2020] 79 GST 312 (AAR – Karnataka), JSW Steel ltd., In re [2019] 110 taxmann.com 286/30 GSTL 115/[2020] 79 GST 270 (AAR – Karnataka)

Levy of GST has been challenged by the petitioner on Licence Fee and Spectrum Usage Charges payable to Department of Telecom under RCM long-with relevant notifications and circulars. The notice has been issued to the respondents by the Hon’ble Madras High Court. – Bharti Airtel Limited [W.P. Nos. 15277, 15281, 15283, 15284, 15285, 15287, 15289 of 2021]

Letter issued by State Government authorizing royalty contractors to collect royalty along with GST in respect of mining right, for and on behalf of government, on forward charge basis was not sustainable as reverse charge mechanism was applicable. Petitioners were engaged in business activity of mining. The State Government authorized royalty contractors to collect GST on amount of royalty collected for and on behalf of Government on forward charge basis. The Hon’ble High Court held that since royalty paid for mining activities was chargeable to GST on reverse charge basis and Reverse charge mechanism itself has not been contested by State Government, letter issued by State Government authorizing royalty contractors to collect royalty along with GST in respect of mining right, for and on behalf of government, on forward charge basis was not sustainable. – Smt. Anjana Choudhary v. State of Rajasthan [2021] 132 taxmann.com 255/[2022] 89 GST 151 (Raj.)[11-11-2021].

The term “promoter” shall have the same meaning as assigned to it in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).

The term “Real Estate Project (REP)” shall have the same meaning as assigned to it in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);

The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent of the total carpet area of all the apartments in the REP;

The term “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.

a. 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 of 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.

b. The author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher.

(i)

(a) a Department or Establishment of the Central Government or State Government or Union territory; or

(b) local authority; or

(c) Governmental agencies

which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section 51 of the said Act 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.