Anish Jain

GST has come into force with effect from 1st July, 2017. Everybody is busy in interpretation of law as well as application of law to its business models. During interpretation of law sometimes we come across controversies in legal provisions. Language of law must be clear and not ambiguous. Ambiguity in law creates scope for misinterpretation because intention of law makers cannot be understand correctly.

Here I am going to discuss controversy in the GST law which are going to affect business to the great extent.

As per Section 24 (i) of the Central Goods and Service Tax Act, 2017 a person making interstate taxable supply is compulsorily required to be registered. A person is required to be registered if following two conditions are fulfilled:-

  • Making interstate supply.
  • Supply must be taxable.

It means if a person is engaged in making interstate supply of taxable goods then he is required to be registered under the act even if taxable supply is of the value of Rs. 1 only. In another sense we can say that an unregistered person cannot make interstate supply.

Now coming to Section 5 (4) of Integrated Goods & Service Tax Act, 2017, as per this section integrated tax in respect of taxable supply of 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.

Mandate of section 5(4) of IGST Act, 2017 is that interstate tax in case of interstate taxable supply from unregistered person to registered person will be paid by the recipient on reverse charge basis. At the same time Section 24 (i) of CGST Act, 2017 mandate that every person making interstate taxable supply is compulsorily required to be registered.

Now both these sections are contra to each other. CGST Act, 2017 says that every person making interstate supply of taxable goods or services or both is compulsorily required to be registered. Other side IGST Act, 2017 says that interstate tax is payable by recipient if supplier of goods or services or both is unregistered. It is not clear if everybody making interstate taxable supply is compulsorily required to be registered then how a person will receive goods or services or both from unregistered person in interstate transactions and what is requirement of Section 5(4) of IGST Act, 2017.

I will be grateful if anybody can give clarity and rational behind these two sections playing in different directions.

More Under Goods and Services Tax


  1. B. Raghava Reddy says:

    This is to cover supplies from J&K where GST law is not applicable and supplies from a country other than India i.e. Imports

  2. B. Raghava Reddy says:

    This is to cover supplies from J&K where GST Act is not applicable as well as for supplies from the country out side India.

  3. JIGNESH J SHAH says:


  4. sudarss1 says:

    in my opinion, interstate taxable services means not exempt service and one should take registration if he does interstate taxable supply. Supposing he has not taken registration and made supply, RCM is applicable

  5. CA Divya Kasundra says:

    Its really very nice topic..
    But both sections hve own scope & i dnt think its contradict 2 each other….i just want 2 give 1 example….
    Employee of company go for business tour out of state & all exps related to tour will be reimbursed by company….where he recieved goods/services from unregister persons like foods , taxi services , per section 5(4) company will be liable to pay tax under RCM & also liable to issue invoice & payment voucher also….
    So section 5(4) of IGST also required & section 24 says about compulsory registration if supplier supply inter state ….so in this case unregister person supply goods/services within state…so its not liable & company liable just bcz of section 5(4)..
    .correct me if i m wrong

  6. Karan says:

    Drafting of law is never questioned as we tray to first understand that law and logic has never go hand in hand.
    Now answer to your question, CGST/SGST/UGST is for intra state applicability and IGST is for inter state applicability.
    While considering to harmonise both sections we can iterpete law as which comes first enacted and notified which superced the other .
    In given scenario ,we can read between lines of both sections which says without registration u can not make inter state sales superced over Sec 5(4) which talks not for compulsory registration as it is alredy stated in CGST act but emphasize on RCM chargebility.

  7. suresh Jain says:

    While we charge the freight amount in invoice and GST is to charged after adding the freight amount in assessable value. GST is charged 18% on total amount after adding the freight amount.

    When we pay the freight to Transporter than again we will have to deposit the GST in reverse charge

  8. RAVIPRAKASH says:

    CGST is central revenue and IGST is consumption based revenue ie., goes to state which consumes the supply. This is the logic behind framing acts.

  9. CA Premchand says:

    If you are CA then your degree liable to be checked As per Honarable Minister CA Piyush Goyal as it is very very simple ACt in the wold.
    If you are not CA please forward this question to him only(we people can not understand simple act)

  10. rachhpal1176 says:

    Thanks for discussing this important aspect. Further to this, following transactions would also be deemed as Inter-state supplies and probably the provisions above, held counter those:

    1. Supplies to SEZ’s from outside the SEZ but within the same state/geographical area where SEZ is situated.
    2. Supplies from Non resident Taxable Persons
    3. Casual Traders doing
    4. Transactions in High seas etc

    I guess concepts like such would explain presence of such exceptional circumstances.

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December 2020