Introduction
Section 9 of the CGST Act lays down the framework for the levy and collection of GST on transactions, detailing the applicable tax rates, the role of the reverse charge mechanism (RCM), and specific non levy. This article aims to provide a thorough understanding of these provisions, making it a must-read for businesses and professionals navigating the GST landscape.
1. Levy of CGST: Section 9(1)
Under Section 9(1) of the CGST Act, a tax known as the Central Goods and Services Tax (CGST) is levied on all intra-state supplies of goods or services, except for alcoholic liquor intended for human consumption. The tax is calculated based on the value determined under Section 15 of the Act, with rates not exceeding 20% as notified by the government.
“Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption…” (CGST Act, 2017)
This section ensures a uniform tax regime across the country, reducing the complexities associated with tax compliance and mitigating the cascading effects of taxes.
2. Reverse Charge Mechanism (RCM): Sections 9(3) and 9(4)
The reverse charge mechanism (RCM) is a critical component of GST, where the liability to pay tax shifts from the supplier to the recipient of goods or services. As per Section 9(3), the government can notify specific categories of supplies on which the recipient is liable to pay GST under RCM. Common examples include legal services provided by advocates, goods transport services, and more.
“The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both…” (CGST Act, 2017)
Furthermore, Section 9(4) extends the RCM to transactions with unregistered suppliers. If a registered person procures goods or services from an unregistered supplier, they are liable to pay tax on a reverse charge basis. This provision plays a crucial role in ensuring tax compliance, particularly in sectors with a high presence of unorganized players.
3. Exclusions from CGST: Alcohol and Petroleum Products
Certain items are specifically excluded from the ambit of CGST. These include alcoholic liquor for human consumption and five petroleum products—petroleum crude, motor spirit (commonly known as petrol), high-speed diesel, natural gas, and aviation turbine fuel. The tax on these items continues to be governed by the existing excise duty and VAT laws.
“The provisions of sub-section (1) shall not apply to the supply of alcoholic liquor for human consumption…” (CGST Act, 2017)
4. RCM and E-Commerce Operators: Section 9(5)
Section 9(5) introduces the application of RCM in the context of e-commerce operators. It mandates that e-commerce operators are responsible for collecting and paying GST on certain notified services, such as transportation services provided by platforms like Uber and Ola. In these cases, the e-commerce operator, rather than the individual service provider, is liable to pay the tax.
“The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on intra-State supplies of which shall be paid by the electronic commerce operator…” (CGST Act, 2017)
This provision is particularly important in the rapidly growing digital economy, ensuring that the tax collection system adapts to modern business models.
Conclusion
Section 9 of the CGST Act, 2017, provides a robust framework for the levy and collection of GST on intra-state supplies of goods and services. It addresses key areas such as the reverse charge mechanism, exclusions for certain high-revenue items, and the responsibilities of e-commerce operators. By understanding these provisions, businesses can better navigate the complexities of GST compliance, optimizing their tax strategies in the process.
Understand GST in detail – https://youtube.com/@caprateekmitruka?si=fn82IeeW35qoyhFX
Goods and Services under GST – https://caprateekmitruka.com/concept-of-goods-and-services-under-gst/