whether RCM is really applicable on supplies received from unregistered dealer?
The GST Council in its 32ndmeeting held on January 10, 2019, gave approval that the changes made by CGST (Amendment) Act,2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 along with the corresponding changes in SGST Acts would be notified w.e.f. February 01, 2019.
CBIC issues 13 Notifications on 29th January 2018 one of is as follows-
According to notifications no 01/2019 of IGST to specify that Reverse Charge Mechanism on Procurement from Unregistered Dealers which was deferred till 30.09.2019 to be completely withdrawn with effect from 1st February 2019.
|Section 9(4) – Reverse charge in case of procurement from unregistered persons|
|The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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.||The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of 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, 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”.|
However, Government made the bedlam among the industry by way of withdrawing the earlier notification and without notifying the class of the person to whom said above provision will be applicable. Also in the earlier original notification no 08/2017 was provided the exemption from unregistered RCM upto Rs. 5000/day.
But in the 32nd meeting Government has silent in this part also. It seems that now, if notified person received any supply from unregistered person they have to pay GST irrespective of value. What can be done in such flustered situation? Whether RCM is practically back or it is just come on the paper..