Reverse Charge Mechanism Unregistered recipients under GST

Posted on 10 June 2022 Category : GST terms

Term Reverse Charge Mechanism Unregistered recipients under GST

This post explains about Reverse Charge Mechanism Unregistered recipients under GST.

Unregistered recipients

Unregistered recipients mean the person who receives taxable supplies without having valid registration under GST Laws.

Reverse Charge Mechanism Unregistered recipients under GST:

Section 9(4) of the CGST Act, 2017 mandates that tax on supply of taxable goods by an unregistered supplier to a registered person will be paid by the registered person under reverse charge mechanism. This provision, however, must be read in conjunction with section 2(105) read with section 7 of the CGST Act, 2017. Section 2 (105) defines supplier as a person supplying the goods or services. Section 7 provides that a supply is a transaction for a consideration by a person in the course or furtherance of business.

Even though the sale of old gold by an individual is for a consideration, it cannot be said to be in the course or furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify to be a supply per se. Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of Section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism on such purchases. However, if an unregistered supplier (who is dealing in such trade) of gold ornaments sells it to registered supplier, the tax under RCM will apply.

The information on Reverse Charge Mechanism Unregistered recipients under GST is detailed above. Comment below your thoughts on Reverse Charge Mechanism Unregistered recipients under GST

Learn Exports Imports Free, Click here

Click here to know GST rate of your goods or service

Procedures to obtain GST registration for non-resident taxable person

Is digital signature option available under registration of GST in India?

Advantages of GST registration in India

Who has to obtain GST registration in India?

Does GST registration number of my firm change time to time in India?

Is GST registration required for a public sector undertaking?

Unique Transaction Reference number (UTR) Means

Term Treatment for Zero Rated Supplies under GST

Transportation of goods without issue of invoice under GST

Meaning of Transitional arrangements for ITC under GST