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CA Final · Indirect Tax Laws · Charge of GST

Kaveri Builders, a registered person in Karnataka, buys specified goods or services from an unregistered supplier. The Government has notified a class of registered persons that must pay tax on reverse charge for specified categories of supplies received from unregistered suppliers. Kaveri falls in that class and the supply falls in the specified category. Who is liable to pay the tax, and what is the legal position?

Kaveri Builders, as the notified registered recipient, must pay tax on reverse charge for the specified supply received from the unregistered supplier. All provisions of the Act apply to it as if it were the person liable to pay tax on that supply, whatever the supplier's registration status.

  1. AThe unregistered supplier, since the recipient only claims credit
  2. BKaveri Builders as recipient, and all provisions of the Act apply to it as if it were the person liable to pay tax on that supplyCorrect
  3. CNeither person, because the supplier is unregistered
  4. DKaveri Builders only if the supply is inter-State

Explanation

Under the notified class-based reverse charge provision, the registered recipient pays tax on specified supplies from unregistered suppliers, and the Act applies to the recipient as if it were liable for paying tax. The supplier being unregistered does not remove the liability. Option A reverses the liability.

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