While the ultimate burden of an indirect tax is to be borne by the consumer, the responsibility to collect and deposit in such cases rests with the supplier. Thus Supplier as defined in Section 2(105) means the person supplying the goods or services or both in relation to any goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. Such a supplier shall be liable for collection and deposit of GST provided he is a taxable person as per the GST Act.
Taxable Person means a person who carries on any business at any place in India in case of Central Goods and Services Tax Act, 2017 or respective State in case of State Goods and Services Tax Act, 2017 and who is registered or required to be registered under Section 22 or Section 24 of the CGST Act, 2017. Thus, in case a person is not carrying any business, he shall not be called a taxable person and no liability as a supplier of output tax liability can be fastened on such person. The following categories of persons have been specified in Act, who shall requires to obtain registration and pay GST under the new regime:
- Supplier making supplies above basic threshold Limit: Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds Rs twenty lakh. This threshold of Rs. ten lakh will apply only if the taxable person conducts his business in any of the Special Category States or States specified in Article 279A(4)(g) of the Constitution namely:
- Jammu & Kashmir
- Himachal Pradesh
- Arunachal Pradesh
- Persons already registered under an earlier law which are subsuming under GST.
- Transferee, or the successor of a business
- Transferee in case of amalgamation or de-merger
- Persons making any inter-State taxable supply of goods
- Casual taxable person
- Persons who are required to pay tax under reverse charge
- Electronic Commerce operators liable to pay tax under the act
- non-resident taxable persons
- persons who are required to deduct tax under section 51
- persons who are required to collect tax under section 52
- persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold specified under paragraph 1
- input service distributor
- persons who supply goods and/or services, other than supplies specified in section 8(4), through electronic commerce operator
- every electronic commerce operator
- person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person
- such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.
All the above persons (except in the first case) are required to obtain registration irrespective of their turnover. Such taxable persons shall be required to pay tax under law. Further, however, there are certain persons who are excluded from the definition of Taxable persons and thus, even when such persons are engaged in business and makes supply, they shall not be classified as taxable person for all GST Acts. Such persons as are excluded are:
- Agriculturist for the purpose of agriculture.
- Persons who are required to be registered under the Act but have a turnover less than 20 Lakhs [10 Lakhs in Special Category States and States mentioned in Article 279A(4)(g) of the Constitution].
- any person engaged in the business of exclusively supplying goods and/or services that are not liable to tax under GST Act.
Specified persons shall be required to pay GST under reverse charge
The Central or State Governments have been empowered to specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the person receiving such goods and/or services. Thus, only in case of reverse charge, persons other than Taxable persons can be required to pay GST.
Therefore, in the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.
Notification No. 04/2017-Central Tax (Rate), dt. 28-06-2017 notifies the reverse charge on certain specified supplies of goods under section 9(3) and Notification No.10/2017-Integrated Tax (Rate) ,dt. 28-06-2017 notified the categories of services on which integrated tax will be payable under reverse charge mechanism under IGST Act.
Section 9(4) of CGST Act, specifies that registered person shall pay the tax in case supply to him is made by an unregistered person. Further all provisions are applicable to him as if he is the supplier discharging tax liability. Input tax credit against the tax charged on supplies from unregistered person is available however to claim the input credit, registered person first has to pay the tax.
But Notification No.08/2017-Central Tax (Rate),dt. 28-06-2017 gave exemption from reverse charge for purchases upto Rs.5,000/- per day from all the unregistered suppliers under section 11(1).
Notification 36/2017 (Central Tax Rate) & 32/2017 (Integrated Tax Rate) gave Exemption from reverse charge u/s 9(4), CGST Act, 2017 and 5(4) of IGST Act, 2017 till 31st March 2018. It is a very welcome step for all the dealers. All the registered persons have been exempted from the applicability of reverse charge u/s 9(4) i.e. goods or services procured from unregistered persons till 31.03.2018. Now, no reverse charge will be required to be paid for procurement from unregistered persons, however the same will be continued in case of goods or services notified u/s 9(3),e.g. Advocates, Govt services, GTA Services etc. Important to note is that this change shall be effective from the date of notification i.e. 13th October 2017.