Understanding Section 9 of CGST Act: Implications and Provisions

Introduction: Section 9 of the Central Goods and Services Tax (CGST) Act encompasses several crucial provisions that govern the imposition of tax on sales of goods and services.

1. Imposition of Central Goods and Services Tax:

• The government mandates the levy of Central Goods and Services Tax on all sales of goods or services within the state, excluding alcohol for human consumption.
• The tax rate, not exceeding twenty percent, is determined by the government based on the recommendations of the council.

2. Central Tax on Specific Supplies:

• Petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, and aviation turbine fuel attract central tax, effective from the notified date by the government as per the council’s recommendations.

3. Reverse Charge Mechanism:

• The government may identify certain categories of goods or services where the recipient is liable to pay the tax on a reverse charge basis.
• Recipients must comply with all provisions of the Act, assuming the responsibility of paying tax for the supply of such goods or services.

4. Tax Liability for Unregistered Suppliers:

• If an unregistered supplier provides taxable goods or services to a registered person, the recipient becomes liable for paying the central tax on a reverse charge basis.
• In this case, the recipient is treated as if they are responsible for paying the tax on the supply, and all provisions of the Act apply to them.

5. Tax Liability for Electronic Commerce Operators:

• The government has the authority to specify certain categories of services where the tax on intra-State supplies should be paid by the electronic commerce operator.
• If such services are supplied through the operator, all provisions of the Act apply to them as if they were the supplier responsible for paying the tax.

Furthermore, the Act outlines specific scenarios regarding the tax liability of electronic commerce operators based on their physical presence or representation in taxable areas or territories.

Section 9(3) of CGST Act: Tax shall be payable by the registered person

Central Government on the recommendation of the GST Council has notified goods in respect of which intra-State and inter-State supplies, central/ integrated tax shall be paid by the recipient of such good sunder reverse charge vide Notification No. 4/2017- Central Tax (Rate), dated 28.06.2017 and Notification No. 4/2017-Integrated Tax (Rate), dated 28.06.2017 respectively

Description of supply of Goods	Supplier of goods	Recipient of supply
Cashew nuts, not shelled or peeled	Agriculturist	Any registered person
Bidi wrapper leaves (tendu)	Agriculturist	Any registered person
Silk yarn	Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn	Any registered person
Supply of lottery	State Government, Union Territory or any local authority	Lottery distributoror selling agent.
Bidi wrapper leaves (tendu)	Agriculturist	Any registered person
Following essential oils other than those of citrus fruit namely: -Of peppermint (Mentha piperita);Of other mints: Spearmint oil (ex-mentha spicata), Water mint-oil (exmentha aquatic), Horsemint oil (ex-mentha sylvestries), Bergament oil (ex-mentha citrate), Mentha arvensis	Any unregistered person	Any registered person
Raw cotton	Agriculturist	Any registered person
Used vehicles, seized andconfiscated goods old and usedgoods, waste andscrap	Central Government, StateGovernment, Union territory or a local authority	Any registered person
Priority Sector Lending Certificate	Any registered person	Any registered person

Central Government on the recommendation of the Council has notified the category of supply of services on which GST shall be paid by the recipient on reverse charge basis (Notification No. 13/2017-Central Tax (Rate), dated 28.06.2017 as amended from time to time)

Category of Supply of Services	Supplier of Service	Recipient of Service
Supply of Services by agoods transport agency (GTA)	Goods Transport Agency (GTA)	Any factory registered under or governed by the Factories Act, 1948 (63 of 1948); orany 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; orany co-operative society established by or under any law; orany person registered under the Central Goods and Services Tax 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; orany body corporate established, by or under any law; orany partnership firm whether registered or not under any law including association of persons; orany casual taxable person; located in the taxable territory.
Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly.Explanation. —”Legal service”means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority	An individual advocate including a senior advocate or firm ofadvocates.	Any business entity locatedin the taxable territory.
Services supplied by an arbitral tribunal to a business entity.	An arbitral tribunal	Any business entity located in the taxable territory.
Services provided by way of sponsorship to any body corporate or partnership firm.	Any person	Any body corporate or partnership firm located in the taxable territory.
Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, -renting of immovable property, andservices specified below-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;] services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; transport of goods or passengers	Central Government, State Government, Union territory or local authority	Any business entity located in the taxable territory.
Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017	Central Government, State Government, Union territory or local authority	Any person registered under the Central Goods and Services Tax Act, 2017
Service by way of renting ofresidential dwelling to a registered person.	Any person	Any registered person
Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter.	Any Person	Promoter
Long term lease of land (30years or more) by any person against consideration in the form of upfront amount (Called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter.	Any Person	Promoter
Services supplied by a director of a company or a body corporate to the said company or the body corporate.	A director of a company or a body corporate	The company or a body corporate located in the taxable territory.
Services supplied by an insurance agent to any person carrying on insurance business.	An insurance agent	Any person carrying on insurance business, located in the taxable territory.
Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company.	A recovery agent	A banking company or a financial institution or a nonbanking financial company,located in the taxable territory.
Supply of services by a music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original dramatic, musical or artistic works to a music company, producer or the like.	Music composer, photographer, artist, or the like	Music company, producer or the like, located in the taxable territory
Supply of services by an author by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957relating to original literary works to a publisher.	Author	Publisher located in the taxable territory:Provided that nothing contained in this entry shall apply where –the author has taken registration under theCentral Goods and Services Tax Act, 2017 (12 of 2017), and filed a declaration, in the form at Annexure I, within the time limit prescribed therein the author makes a declaration, a prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher
Supply of services by the members of Overseeing Committee to Reserve Bank of India	Members of Over-seeing Committee Constituted by the Reserve Bank of India	Reserve Bank of India.
Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs).	Individual Direct Selling Agents(DSAs) other than a body corporate, partnership or limited liability partnership firm.	A banking company or a non-banking financial company, located in the taxable territory
Services provided by business facilitator (BF) to a banking company	Business facilitator (BF)	A banking company, located in the taxable territory.
Services provided by an agent of business correspondent (BC) tobusiness correspondent (BC)	An agent of business correspondent (BC)	A business correspondent, located in the taxable territory.
Security services (services provided by way of supply of security personnel) provided to a registered person:Provided that nothing contained in this entry shall apply to, -a department or Establishment of the Central Government or State Government or Union territory; or local authority; or Governmental agencies which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 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 a registered person paying tax under section 10 of the said Act.	Any person other than a body corporate	A registered person, located in the taxable territory
Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the considerationcharged from the service recipient, provided to a bodycorporate.	Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoicecharging central tax at the rate of 6 per cent to the service recipient	Any body corporate located in the taxable territory
Services of lending of securities under Securities Lending Scheme, 1997 (“Scheme”) of Securities and Exchange Board of India (“SEBI”), as amended.	Lender i.e., a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the Scheme of SEBI	Borrower i.e., a person who borrows the securities under the Scheme through an approved intermediary of SEBI.

In addition to the above list given under Central Tax- Rate, following additional category of supply of services are listed under Notification No. 10/2017-Integrated Tax (Rate), dated 28.06.2017 on which GST shall be paid by the recipient on reverse charge basis: –

Category of Supply of Services	Supplier of Service	Recipient of Service
Any service supplied by anyperson who is located in a non-taxable territory to any person other than non-taxable online recipient.	Any person located in a non-taxable territory	Any person located in the taxable territory other than non-taxable online recipient.
Services supplied by a personlocated in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India.	A person located in non-taxableterritory	Importer

Points to be Remembered: – 

1. No partial reverse charge is applicable under GST. 100% tax will be paid by the recipient if reverse charge mechanism applies.
2. All taxpayers required to pay tax under reverse charge have to mandatorily obtain registration and the threshold exemption is not applicable on them.
3. Payment of taxes under reverse charge cannot be made with utilisation of input tax credit and has to be made in cash.
4. The recipient can take the credit of tax paid on inward supplies liable to reverse charge once the he makes payment of tax in cash.

SERVICES BY DIRECTOR

Services provided by a director on basis of individual capacity like renting of property, sale of goods etc to a company or body corporate are liable to be taxed under forward charge.

They are also liable to be taxed under reverse charge if the director is not an employee of the company or body corporate and the director’s services are being provided to the company as a professional.

If the director is providing services to the company or body corporate as an employee, then the transaction is not considered as a supply under GST, and hence, no GST would be applicable on such transactions.

However, if the director is not an employee of the company or body corporate and is providing services to the company or body corporate in a professional or other capacity, then the transaction would be considered as a supply under GST, and the company or body corporate is liable to pay GST under reverse charge mechanism.