Notification No. 08/2017- Central Tax (Rate) dated June 28, 2017, exempts the supplies made under Section 9(4) of the CGST Act where the supplies made are not exceeding 5,000/- per day.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE : FAQ NO. 51)
Since registration is compulsory to supply inter-State, can reverse charge be held as not applicable
Section 9(4) and 5(4), respectively do not provide any excuse to rely on supplier’s obligation to compulsorily obtain registration under section 24.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE: FAQ NO.46)
How to verify if supplier engaged in business or not engaged in business to decide applicability of reverse charge
There is no procedure specified to verify this fact. Relying on GSTIN being disclosed by supplier is not sufficient.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE : FAQ NO. 45)
Is reverse charge u/s 9(4) applicable to all supplies where supplier unregistered or only if the supplier engaged in business of supply without lawfully being registered
Press Release issued by Government states that tax under section 9(4) is not payable if the supplier is not in business but the recipient may not be in a position to accurately conduct this inquiry and reach a conclusion that is acceptable by the Government. Caution is advised while extending the interpretation provided in the press release to all other cases.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE: FAQ NO. 44)
Is reverse charge applicable if tax-paid supplies are purchased and resold by an unregistered person
Yes, reverse charge under section 9(4) is attracted because inquiry into two or three level earlier is not permitted. At the first level if the supplier is unregistered, then section is attracted.
( ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE : FAQ NO.43)
In case supplier is under composition and no tax appears on invoice, is reverse charge attracted u/s 9(4)
Though no tax appears on the invoice, the supplier is nevertheless registered. Hence, section 9(4) is not attracted.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE: FAQ NO.42)
In case supplier eligible to threshold exemption, is reverse charge applicable
Supplier may not have paid tax due to threshold benefit but this does not excuse recipient from liability under section 9(4) which is attracted if ‘supplier is not registered’ without inquiring into the reasons for such non-registration.
(ICAI FAQ PUBLICATION REVERSE CHARGE: FAQ NO. 41)
Explain effect of section 23 in relating to reverse charge
Persons specified in section 23 are excluded from registration. If such persons are receiving inward supplies liable to tax on reverse charge basis under section 9(3), they will be liable to register by section 24 and comply with other requirements of law. But, if such persons do not attract section 9(3), then they can remain unregistered and therefore not attract section 9(4) too.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE: FAQ NO.40)
Is reverse charge applicable on supply of goods also or is it only on supply of services
Payment of tax on reverse charge is applicable on goods also, you may refer Notification no. 04/2017- Central Tax (Rate) and Integrated Tax (Rate) dated June 28, 2017.
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE: FAQ NO. 39)
Is condition to pay supplier within 180 days applicable to supplies covered by reverse charge
This condition is found in proviso to section 16(2) and applies where tax is charged by the supplier. There is no exception created in Rule 37 in respect of reverse charge. Hence, this condition would also apply to suppliers attracting Section 9(3) and 9(4).
(ICAI FAQ PUBLICATION 06-09-2017 REVERSE CHARGE : FAQ NO.38)