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CMA Intermediate · Direct and Indirect Taxation · Levy and Collection of CGST and IGST

Ravi Traders, a registered dealer in Pune, buys goods from an unregistered supplier. The Government has notified a class of registered persons and specified categories of goods for this purpose under section 9(4) of the CGST Act, 2017. If Ravi Traders falls in that class and the goods are in the specified categories, who pays the central tax on that supply?

Ravi Traders pays the tax on reverse charge basis. Section 9(4) lets the Government notify a class of registered persons who must pay tax on specified goods or services received from an unregistered supplier, and the Act then applies to the recipient as the person liable.

  1. AThe unregistered supplier, since he made the supply
  2. BRavi Traders, on reverse charge basis as the recipientCorrect
  3. CThe Government, until the supplier registers
  4. DRavi Traders only if the supplier later collects the tax from him

Explanation

Under section 9(4), the notified class of registered persons must pay tax on reverse charge basis on specified categories of supplies received from an unregistered supplier, and all provisions of the Act apply to the recipient as if he were the person liable. Option A reverses the liability, and the remaining options have no basis in the section.

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