Levy and Collection of Tax – Section 9 of CGST Act

The Central Goods and Services Tax (CGST) Act, 2017, governs the imposition and collection of tax on intra-state supplies of goods and services in India. Section 9 of the CGST Act outlines the provisions related to levy, collection, and responsibility of tax payments. Understanding these provisions is crucial for businesses, taxpayers, and e-commerce operators to ensure compliance and avoid penalties.

Key Provisions of Section 9 of CGST Act

1. General Levy of CGST (Sub-section 1)

The Central Goods and Services Tax (CGST) is applicable to all intra-state supplies of goods and services, except:

• Alcoholic liquor for human consumption

• Un-denatured extra neutral alcohol or rectified spirit used for manufacturing alcoholic liquor

The tax is levied based on the transaction value determined under Section 15 of the Act. The maximum CGST rate cannot exceed 20%, and the government, upon the recommendation of the GST Council, notifies the applicable tax rates.

2. Tax on Petroleum Products (Sub-section 2)

Unlike other goods and services, certain petroleum products such as:

• Petroleum crude

• High-speed diesel (HSD)

• Motor spirit (petrol)

• Natural gas

• Aviation turbine fuel (ATF)

are currently exempt from CGST. However, the government has the power to impose GST on these items at a later date based on the GST Council’s recommendations.

3. Reverse Charge Mechanism (RCM) (Sub-sections 3 & 4)

In specific cases, the recipient of goods or services, rather than the supplier, is liable to pay tax under the reverse charge mechanism (RCM). This applies in the following scenarios:

• Notified categories of goods and services under RCM (as per government notifications)

• Supplies received from unregistered suppliers by certain classes of registered persons

Under RCM, the recipient must comply with all GST rules as if they were the actual supplier.

4. Taxation of E-Commerce Operators (Sub-section 5)

E-commerce operators facilitating the supply of services are liable to collect and pay GST in specific cases. If a service provider supplies goods or services through an electronic commerce platform, the e-commerce operator is responsible for tax collection.

Additional Provisions for E-commerce Operators:

• If the e-commerce operator has no physical presence in India, they must appoint a representative to comply with GST regulations.

• If no representative is available, the e-commerce operator must appoint a person in India for tax payments.

Impact of Section 9 on Businesses

Understanding Section 9 is crucial for businesses to ensure GST compliance. Here’s how different sectors are affected:

1. Small & Medium Enterprises (SMEs)

• SMEs must ensure correct GST classification for their products/services to avoid penalties.

• Businesses dealing with unregistered suppliers should check if they fall under reverse charge liability.

2. Petroleum and Alcohol Industry

• Although petroleum products and alcoholic liquor are currently outside GST, future amendments may bring them under the GST regime.

3. E-Commerce Operators

• Online marketplaces like Amazon, Flipkart, and Uber must comply with the provisions regarding tax collection at source (TCS).

• Platform-based service providers, such as Swiggy and Zomato, must ensure proper compliance with GST payment obligations.

Conclusion

Section 9 of the CGST Act lays the foundation for tax levy and collection in India. From defining the applicability of GST on goods and services to specifying reverse charge mechanisms and e-commerce taxation, it is essential for businesses to stay updated and compliant. With GST constantly evolving, businesses should keep track of notifications from the government and GST Council to avoid non-compliance issues.

Stay compliant, stay ahead! If you have any doubts regarding GST applicability or compliance, consult a CA for expert guidance.