Do receiving services where liability is fixed under RCM, mandate registration even to whom who are not registered? Let’s see
Section 24(III) of CGST act, regarding compulsory registration mandate registration of a person who are required to pay tax under reverse charge and this also overrule section 22(I) of the act. It means registration require irrespective of the aggregate turnover limit.
It is interesting to read section 23 (I) (a) of the act which states that person not LIABLE TO REGISTER IF
“Any person engaged exclusively in the business of supplying goods or service or both that are not liable to tax or wholly exempt from tax under the act or under the IGST”
Combined reading of Section 23(I)(a) and Section 24(III) create some confusion that whether person receiving goods or service where RCM is applicable require to take mandatory registration, irrespective of the turnover as stated in section 22 (I) of the Act.
Section 23 is an independent section and in nowhere in Section 24 written that it overruled section 23 as it do so with section22 (I) of the act.
Answer would be yes as well as No. Let’s see few scenario of the fact:-
Answer to above point 1) is NO & point 2) is yes.
So as per section 23 (i)(a) of the act, if a person engaged EXCLUSIVELY in the business of supply not liable to tax or wholly exempt from tax by virtue of some exemption notification than no need to take registration even if it receive service where tax need to paid under RCM. It is an independent section and read exclusively.
In other case if a person who engage in a business of goods or services which is partially or fully liable to tax but have not taken registered due to exemption limit. Need to take registration and pay tax under RCM if he receives service or good which is liable to RCM.
(Writer is a Member of ICAI and can be reached @[email protected] or +918178480333)