: The applicant is engaged in exclusive supply of wholly exempted goods and services in addition he is liable to pay tax under Reverse Charge mechanism as per Section 9(3) of the GST Act or 5(3) of the IGST Act. Whether the applicant will be liable for re

PJ/Case Law/2016-2017/3460

Case: JOINT PLANT COMMITTEE
Citation: 2018 (13) G.S.T.L. 89 (A.A.R. - GST)
Issue: The applicant is engaged in exclusive supply of wholly exempted goods and services in addition he is liable to pay tax under Reverse Charge mechanism as per Section 9(3) of the GST Act or 5(3) of the IGST Act. Whether the applicant will be liable for registration under any clause of Section 24 of the GST Act even if it is not making any taxable supply.
Brief facts: The issue involved in the appeal is filed by Joint Plant Committee(hereinafter referred to as the assessee). The assessee created under notifications of the Ministry of Steel, Managing and Operating Development Fund and other funds accumulated under Iron & Steel (Control) Order, 1956, and undertaking other allied activities, i.e., study and analysis of and maintenance of a comprehensive database on market situation in Iron & Steel Sector - Main source of income of applicant being interest earned on extending deposits, loans and advances, Sale of Journals and Renting of Guest Houses at rent below Rs.1000 .All these supplies are exempt from GST under various Notifications under Central and State GST laws .The assessee have filed an application, under Section 24 of the GST Act on 21-3-2018 for advance ruling hence the same is admitted.
Appellant contention:The Applicant is a non-profit organization set up by the Central Government under Clause 17 of the Iron & Steel (Control) Order vide SO 1567, dated 7-4-1971. The Applicant declares that it has not been registered under any of the repealed Acts and wants a ruling on whether it is required to be registered under the CGST/WBGST Act, 2017 The functions of the Applicant, as specified in the above notifications of the Ministry of Steel, Government of India, include Management and Operation of the Steel Development Fund and other funds accumulated under the Iron & Steel (Control) Order, 1956, study and analysis of and maintenance of a comprehensive database on market situation in the Iron & Steel Sector including fluctuation in market price, production, availability and movement of material etc. It appears from the statement of accounts for the year ending on 31-3-2017, submitted along with the Application, that the main source of the Applicant’s income is interest accrued on the deposits and on the loans provided from the Steel Development Fund. A secondary source of income is the consideration received from sale of journals and periodicals and from renting accommodation in its guest houses. The aggregate turnover from these sources well exceeds the threshold of twenty lakh rupees and makes it liable for registration under Section 22(1) of the GST Act, provided it does not make exclusively supply of goods or services that are not liable to tax or wholly exempt from tax under the GST Act.The Applicant’s supplies of journals and periodicals are wholly exempt under Serial No. 120 of Notification No. 2/2017-Central Tax (Rate).The Applicant’s case is that its supplies of services are not taxable either. The Applicant declares it makes no other supplies of goods or services.
Reasoning of Judgement:The Authority for Advance Ruling stated that it has considered the submissions made by the applicant in their application for advance ruling. It has also considered the question/issue on which advance ruling is sought by the applicant, relevant facts having bearing on the question/issue raised, the applicant’s understanding/interpretation of law in respect of the issue.The applicant sought advance ruling on the question that whether the applicant will be liable for registration under any clause of Section 24 of the GST Act even if it is not making any taxable supply but is liable to pay tax under Reverse Charge as per Section 9(3) of the GST Act or 5(3) of the IGST Act.
Reverse Charge Mechanism - Applicability to unregistered person - Advance Ruling - Since applicant is unregistered and also not liable to be registered, provisions of reverse charge under Section 9(4) of Central Goods and Services Tax Act, 2017 or Section 5(4) of Integrated Goods and Services Tax Act, 2017 will not apply - Section 9(4) of Central Goods and Services Tax Act, 2017. [para 11]
Section 24 is not subject to the provisions of Section 23 of the GST Act. If a person, therefore, is not liable to be registered for making exclusively exempt supplies but is liable to pay tax under Reverse Charges under Section 9(3) of the GST Act or 5(3) of the IGST Act, he shall be required to get himself registered under the GST Act, irrespective of the quantum of the aggregate turnover.
Based on information furnished along with the Application and the material presented at the time of Personal Hearing, it is, therefore, held that the Applicant is engaged exclusively in supplying goods and services that are wholly exempt from tax, and, therefore, not liable to be registered in accordance with the provisions under Section 23(1) of the GST Act, subject to the condition that the Applicant is not otherwise liable to pay tax under the Reverse Charge mechanism under Section 9(3) of the GST Act or 5(3) of the IGST Act.
As the applicant is unregistered and not liable to be registered, the provisions of Reverse Charge under Section 9(4) of the GST Act or 5(4) of the IGST Act will not apply.
Decision: The Advance ruling was in favour of assessee.
Comment: The gist of the case is that if the applicant is not required to be registered under the GST act, but is liable to pay Reverse Charge then the provision of reverse charge mechanism under Section 9(4) of the GST Act or 5(4) of the IGST Act will not apply.
Prepared by:Bhavika Kanjani

Comments

PJ/Case Law/2016-2017/3460

Post a Comment

Query