Page 10 - Ch3_RCM

Answer: Determination of taxable value of the Professionals Security-Pune:-

Sr. No. Recipient of service Taxable Taxable Refer
under value in ₹ note
i. XYZ Pvt. Ltd. (Registered person) Reverse Charge - 1
ii. Sindh Co-operative Credit Society,(Un-registered person) Forward Charge 8 lakhs 1

iii. Mr. Altaf, Gujarat (Registered u/s 10 of CGST Act) Forward Charge 2 Lakhs 2
iv. Star Industries Ltd., USA Forward Charge 7 Lakhs 4
Total taxable value 17 lakhs
Notes:-
1. As per section 9(3) of CGST Act, 2017, If security services (services provided by way of supply of

security personnel) are provided by any person other than a body corporate to a registered person
located in the taxable territory, then GST is payable on reverse charge basis by recipient.
2. The following are the exceptions to the service covered under reverse charge in note 1 above:-
Ü a registered person paying tax under section 10 of the said Act i.e. composition scheme.

3. RCM will apply only if service provided to registered person located in taxable territory. As Star
Industries is located in USA which falls outside the taxable territory, The Professionals Security-
Pune will be liable to pay tax under forward charge.

Determination of Tax liability of The Professionals Security - Pune is as follows:-
Sr. ₹ in Lakhs IGST CGST SGST
Particulars
No. @ 18% @ 9% @ 9%
1 Intra State Supply 8 - 72,000 72,000
2 Inter State Supply 2 36,000 - -
3 Export 7 - - -

Total Tax Laibility 36,000 72,000 72,000
Note:- If supplier satisfies the conditions , then it can avail benefit of zero-rated supply for export to Star
Industries Ltd. USA & no GST would be payable.

03. Section 9(3)-Common Questions for all services
CCP 03.03.12.00

Decide which person is liable to pay GST in the following independent cases, where the recipient is
located in the taxable territory. Ignore the Aggregate Turnover and Exemption available.
(I) Mr. Raghu provided sponsorship services to WE-WIN Cricket Academy, an LLP. [Study Mat]
(ii) 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm
which is not registered under GST.
[CA Inter Suggested Nov 19] [CA Inter - Nov 18 Exam] [Study Mat]
Answer:-

Legal Provision:- As per section 9(3) of CGST Act, if sponsorship services are provided by any
i
person to any body corporate or partnership firm located in taxable territory, then GST is payable
on reverse charge basis by recipient.

Discussion & Conclusion:-
Ü In the given case, sponsorship services are provided to an LLP which is considered as a partnership
firm under GST law.

Ü Therefore, WE-WIN Cricket Academy is liable to pay GST under reverse charge.

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