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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

Mehta Traders, a registered person, belongs to a class notified for reverse charge on specified goods or services received from unregistered suppliers. It receives such a specified supply from an unregistered supplier, Ramesh. Which statement follows from the Act?

Mehta Traders, as a notified registered recipient, pays tax on reverse charge for the specified supply from the unregistered supplier. All Act provisions apply to it as the person liable, and the unregistered supplier cannot collect tax.

  1. ARamesh must collect the tax from Mehta Traders
  2. BMehta Traders pays the tax on reverse charge basis as if it were the person liable to pay tax on that supplyCorrect
  3. CNobody is liable since the supplier is unregistered
  4. DThe Government itself pays the tax and recovers it from Ramesh

Explanation

The Act lets the Government notify a class of registered persons who pay tax on reverse charge on specified supplies from unregistered suppliers, with all provisions applying to the recipient as the person liable. Ramesh, being unregistered, cannot collect tax under the prohibition on unauthorised collection.

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