A big Relief to Dealers who are not registered under GST regime. Section 9(4) which is said to be a draconian section in GST has created a fuss all over the industry.
As per Section 9(4) of CGST act 2017 any Supply of goods or service from an Unregistered supplier to a Registered supplier will cast liablity to Pay GST to the Government in the form of RCM I.e Reverse charge mechanism.
Moreover, As per Section 12 of CGST Act 2017 , Time of Supply of goods in case of RCM shall be the earliest of :
However , As per Section 13 of CGST act 2017 , time of Supply of service in case of RCM shall be earliest of the following :
The Service Receiver i.e Registered Person under GST is require to issue taxable invoice on its own i.e Self invoicing under section 31(3)(f) of CGST act 2017.Self invoicing is required in order to avail Input tax credit on the Tax paid to government. As Possession of Invoice is a basic element in order to claim ITC of Tax paid against any supply.
Not only the compliance of raising the invoice (Self invoicing) would increase, working capital would also get block which is the key requirement of Every business.There will not be any cost as such to the Registered dealer because the Tax paid in the current month can be availed in the following month.
It was found to be a negative provision and has created a lot of fuss-
1. Registered dealer would purchase goods or services from registered Dealers instead of Unregistered dealers as the former would be prejudice to there intrest. Less compliance and zero cost.
2. This was also a setback to the URD’s whose turnover limit doesn’t exceed 20 Lakhs thereby not legally required to get registration. In order to run there business they will have to get themselves registered under GST voluntarily otherwise no registered Dealer would dealt with them in any way.
The Government has made its intentions clear and has decided to exempt supplies worth Rs 5000/- per day from any Unregistered dealer which means Supplies above 5000 would require Registered Person to comply with the provisions as specified under GST law. For the supplies above 5000, A monthly consolidated bill can be issued.
Setting an exemption limit in this regard is a welcome move from the government.
Views expressed are personal.
Name of author : Ashish Kumar Madnawat