Question:-9

A Registered Person is dealing in Exempt Items only. Does it need to pay GST under RCM on freight/transport? If his turnover exceeds Rs. 2.00 Crores does he need to get his accounts audited? Does RCM Turnover needs to be added in Exempt Turnover to derive total aggregate turnover.

Answer

Facts of the case: Turnover of the assessee includes only exempt supply.

1) Does it need to pay GST under RCM on freight/transport?

2) If his turnover exceeds Rs. 2 Crores does he need to get his accounts audited?

3) Does RCM Turnover needs to be added in Exempt Turnover to derive total aggregate turnover.

Law Applicable:

As per Rule 80, sub rule (3) of CGST Rules
,
(3) Every registered person other than those referred to in the proviso to sub-section (5) of section 35 whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
As per Section 2(6) of CGST Act,

(6) 'aggregate turnover' means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

As per Section 2(47) of CGST Act,

(47) 'exempt supply' means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply

Interpretation: Reconciliation Statement is required to be filed if the Aggregate Turnover is greater than Rs. 2 Crore. Also, as per the definitions it can be understood that Aggregate Turnover includes exempt supply but excludes inward supplies on which tax is payable on RCM basis.

Conclusion:

1) As per Notification No. 13/2017-Rate CGST, if the conditions of Sl. No. 1 are satisfied then GST is required to be paid on RCM basis.

2) Yes, audit is required to be conducted if the aggregate turnover exceed Rs. 2 Crore.

3) No, inward supplies on which tax is required to be paid on RCM basis is not required to be included in exempt supply.