GST on supply received from URD
With the introduction of GST, a new provision has been announced in section 9(4) of the CGST Act, wherein it was clarified in respect of supply of goods or services by an unregistered supplier to a registered recipient, tax on such supply is required to be paid by the recipient of supply under ever charge mechanism. Further, by way of NN 08/2017-CT (rate) dated 28.06.2017 (effective from 01.07.2017), it was made clear vide a proviso that where aggregate value of such supply from unregistered supplier to registered recipient does not exceed Rs.5,000/- per day; the recipient is exempt from payment of GST.
For the purpose of providing benefit to small business and substantially reduce compliance costs NN 38/2017-CT (rate) dated 13.10.2017 has been issued. In the said notification, the proviso (in NN 08/2017-ct (rate) dated 28.06.2017) has been omitted and exemption for payment of GST on procurement of supply from unregistered person has been allowed to every registered person till 30.09.2019.
Recently, M/s Famous Studio Ltd, (2019) 104 taxmann.com 122 (AAR - MAHARASHTRA) seek an advance ruling on the question as to whether the exemption from payment of GST on Reverse charge basis under section 9(4) of the CGST Act, on recseipt of supply of goods and/or services from an unregistered person is applicable irrespective of any threshold limit right from 01-07-2017 vide NN 8/2017 dated 28.06.2017 read with NN 38/2017 dated 13.10.2017
In instance case, the applicant has received tenancy rights from an unregistered person dated on 31.08.2017 for Rs.54,00,000. Transfer of tenancy rights in goods or of undivided share in goods without transfer of titles thereof treated as supply of services under para 1(b) of schedule 2 of CGST Act, 2017. In view of these facts the sole question for consideration is as to whether the amendment made in NN 38/2017 to have retrospective effect?
The court observed as follows: "The Golden Rule of construction is that in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the act is passed."
Further supreme court in Hitendra Vishnu Thakur and others vs. State of Maharashtra and others, (1994)4 SCC has culled out the principles with regards to the ambit and the scope of an amending act and its retrospective operation as follows:
- (i) A statute which affects substantive rights are presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.
- (ii) Law relating to forum and limitation is procedural in nature, whereas law relating to rights of action and right of appeal even though remedial is substantive in nature.
- (iii) Every litigant has a vested right in substantive law but no such rights exits in procedural law
- (iv) A procedural statute should not generally speaking be applied retrospective where the result would be Create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.
- (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication."
Appling the Golden Rule of construction and the principle laid down by Apex court as above to the facts of the present Case, I find no difficulty in arriving at conclusion that there is nothing to show that amendment in NN 38/2017 would have retrospective effect and therefore, it is find that the provision of RCM u/s 9 (4) of the CGST Act read with NN 08/2017-ct (rate) dated 28.06.2017 are applicable for the period July 2017 to 12th October 2017.