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.