Composition dealers purchasing scrap vehicles from Government Authorities liable for GST on RCM basis
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Case Details: |
M/s Ahmedraza Abdul Wahid Munshi (Nadim Scrap) |
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Appeal No.: |
Advance Ruling No. GUJ/GAAR/R/18/2021 |
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Ruling pronounced by: |
GST AAR Gujarat |
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Date of Ruling: |
30-06-2021 |
- Vide Section 9(3) of CGST Act, The Government may specify the categories of supply of goods or service or both on which the tax shall be paid on reverse charge mechanism by the recipient.
- In exercise of powers of section 9(3) of CGST Act, the Central Government specifies at Sr. No. 6 to Notification No. 04/2017- Central Tax (Rate) dated 28-06-2017, Central tax shall be paid on reverse charge basis by the recipient as follows:
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Sr. No. |
Tariff item, sub-heading, heading, or chapter |
Description of supply of goods |
Supplier of goods |
Recipient of supply |
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06 |
Any Chapter |
Used vehicles, seized and confiscated foods, old and used goods, waste and scrap |
Central Government, State Government, Union Territory or a local authority |
Any registered person |
Sr. No. 06 above was inserted vide Notification No. 36/2017- Central Tax (Rate) dated 13-10-2017.
- Vide Section 9(4) of the CGST Act, The Government may specify a class if registered persons who shall, in respect of the supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both.
- Notification No. 08/2017- Central Tax (Rate) dated 28-06-2017 exempts intra-state supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the CGST Act, 2017 provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or services or both received by a registered person from any r all the suppliers, who is or are not registered, exceeds five thousand rupees in a day.
- The aforesaid notification has been amended vide Notification No. 38/2017- Central Tax (Rate) dated 13-10-2017 vide which the proviso to the Notification (mentioned in para above) has been omitted. Further, Notification No. 07/2019- Central Tax (Rate) dated 29-03-2019 notifies that the specified registered persons shall, in respect of the supply of goods or services or both, received from an unregistered supplier shall pay tax on reverse charge basis as the recipient of such goods or services or both. However, subject goods are not yet notified vide said Notification No. 07/2019- CT (Rate).
Ruling:
Based on the Notifications issued vide section 9(3) and section 9(4) of CGST Act, we issue the following ruling:
- Composition Dealer purchasing scrap/used vehicles from the following suppliers namely: Central Government, State Government, Union Territory or a local authority are liable to pay tax on RCM basis.
- There is no RCM tax liability for the purchase of subject-goods from unregistered dealers.
Read Detailed Order: gstcouncil.gov.in/sites/default/files/AAR-Dynamic/GUJ_AAR_18_2021_30.06.2021_AAM.pdf
Disclaimer: The above article is based upon the ruling of the Advance Ruling Authority and is meant for informative purposes only. Readers are requested to act diligently and under consultation with a professional before applying the information contained in this article.
