INTERPRETATION OF CENTRAL GOODS AND SERVICES TAX (CGST) ACT (PART-10) (Meaning of Important Terms)

[Dr. Sanjiv Agarwal]

This part of the series contains meanings of certain terms covered in Section 2 of the CGST Act, 2017.  These are Proper Officer, Quarter, Recipient, Registered Person, Removal and Reverse Charge.

Proper Officer [Section 2(91)]

'Proper officer' in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board.

Proper officer means Commissioner or Officer of Central Tax who is assigned such function by Commissioner or Board. The term ‘ proper officer’ could be understood as assessing officer of a taxable person.

Quarter [Section 2(92)]

'Quarter' shall mean a period comprising three consecutive calendar months, ending on the last day of March, June, September and December of a calendar year.

‘Quarter’ means a period of three calendar months. There are jour quarters in a calendar year i.e, three months ending on last day of March, June, September and December of a calendar year.

Recipient [Section 2(93)]

'Recipient' of supply of goods and/or services means-

1. where a consideration is payable for the supply of goods and/or services, the person who is liable to pay that consideration,
2. where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available, and
3. where no consideration is payable for the supply of a service, the person to whom the service is rendered,

and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply.

Recipient shall also include an agent acting as such on behalf of the recipient in relation to the goods and/or services supplied.

In a contract of supply of goods and / or services, there are two parties, one is known as supplier of goods and / or services and other is called recipient of goods and / or services.

In the supply contract involving the payment of consideration, the person who is liable for payment of such consideration will be considered recipient. It is important to note that consideration could be paid by recipient or any third person. The determination will not depend on the fact who makes the payment but the person who is liable to make the payment will be considered recipient.

In the contract for supply of goods, where no consideration is payable, recipient would mean a person to whom goods have been delivered or possession or use of the goods is given or made available.

In respect of contract of supply of services, where no consideration is payable, recipient would mean the person to whom service has been rendered.

Registered Person [Section 2(94)]

'Registered person' means a person who is registered under section 25 but does not include a person having a Unique Identity Number.

Registered person is a person who is registered under section 25 of the Act. The term ‘registered person’ does not include a person having a ‘Unique Identity Number’ (UIN).

Any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other person or class of persons, as may be notified by the Commissioner, shall be granted a Unique Identity Number for the purpose of GST Law.

Removal [Section 2(96)]

'Removal'  in relation to goods, means-

(a)  despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier; or

(b)  collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient.

Two aspects have been considered for defining removal of goods. First, the goods which require to be moved and the other which are not required to be moved. Thus dispatch of goods for delivery and collection of goods by recipient has been considered as removal. It is important to note that dispatch of goods not for delivery will not constitute removal.

Goods can be dispatched for delivery by the supplier or any other person acting on behalf of supplier. The term ‘Removal’ has been used for providing law in respect of issuance  of tax invoice under section 31, Job work provisions under section 19 and also in transition provisions.

'Reverse Charge [Section 2(98)]

'Reverse charge' means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act.

Reverse charge means the liability to pay tax on the recipient of goods and / or services in respect of supplier of such goods and/or services. The goods and / or services which are notified for reverse charge by Government on recommendation of GST Council, the tax on supply of such goods  and / or services is required to be paid by person receiving such goods and / or services instead of suppliers of such goods and / or services. This is called reverse charge mechanism of payment of tax. In respect of such goods and services, all provisions of the Act will be applicable to recipient.

The persons who are liable for payment of tax on reverse charge basis will not enjoy the benefit of threshold limit. Therefore, every person who is liable to pay tax on reverse charge basis will be required to be registered under GST law and pay tax.

Reverse charge in case of supply of goods or services or both means the cases of supply in which the liability to pay GST is cast upon the recipient of supply rather than on supplier of supply.

The Central Government or the State Governments, on recommendation of GST Council, has the powers under the Act to notify cases of supply in which tax would be paid on reverse charge basis.

(To be continued.....)