Question 1: What is the Advance Ruling?
Answer: As per Section 95 (a)
“Advance Ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
Question 2: Who can apply for Advance Ruling?
Answer: Any Person (Tax Payer or Non Tax Payer) need to know the following things can apply for Advance Ruling As per Section 97(2)
(a) Classification of any goods or services or both;
(b) Applicability of a notification issued under the provisions of this Act;
(c) Determination of time and value of supply of goods or services or both;
(d) Admissibility of input tax credit of tax paid or deemed to have been paid;
(e) Determination of the liability to pay tax on any goods or services or both;
(f) Whether applicant is required to be registered;
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.
Question 3: What is the Fee of Advance Ruling?
Answer: The Fee is Rs. 5000/- CGST & Rs. 5000/- SGST as per Section 97 read with Rule 104(1) of CGST Rules’2017 i.e.
Total Fees is Rs. 10,000/-.
Question 4: Advance Ruling can over Rule the Whole Section and applicable for all Tax Payers?
Answer: No, Advance Ruling not over Rule any Section and it applicable only on applicant on the concerned officer or the jurisdictional officer in respect of the applicant because the Advance Ruling is differ in different cases and depend on particulars and Facts of Application.
Question 5: What is Reverse Charge Mechanism (RCM)?
Answer: As per Section 2 (98) definition of Reverse Charge Mechanism (RCM) is
“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.
Question 6: Whether any Notification or Clarification for RCM on Director Services?
Answer: Yes department issue a Notification No. 13/2017 dated on 28th June’2017 in which Entry No.06 u/s 9(3) of CGST Act’2017 said about RCM applicable on Directors Salary.
|Sr. No.||Category of Supply of Services||Supplier of Services||Recipient of Services|
|6||Services supplied by a Director of a company or a body corporate to the said company or the body corporate||A Director of the Company or the Body Corporate||The Company or the Body Corporate Located in Taxable Territory|
Question 7: What about RCM Applicable on Directors Salary?
Answer: This is the disputed matter because there are 02 Advance Ruling for RCM on Directors Salary.
First in the Case of M/s Alcon Consulting Engineers (INDIA) Pvt. Ltd.
Apply for Advance Ruling in respect of the following questions:-
Whether RCM is applicable on remuneration paid to the Directors.
Ruling by Authority:
The Remuneration paid to the Director of the applicant company is liable to Tax under reverse charge mechanism u/s 9(3) of in the hands of Applicant Company as it is covered under Entry No. 6 of Notification No. 13/2017 dated on 28.06.2017.
Second in the Case of M/s Clay Craft India Pvt. Ltd.
A Company which is Located in Rajasthan with Name M/s Clay Craft India Pvt. Ltd. Registered in GST with GSTIN 08AAACC6866D1Z0 and having 06 Directors and they working in the company at different Level of management in the company and each one of them is holding charge of procurement of raw material, production, quality checks, dispatch, accounting etc.
In the other words they are working as an employee of the company for which they are being compensated by the company by way of Regular Salary and other allowances as per the company policy & as per their employment contract
Ruling by Authority:
The Consideration paid to the directors by the applicant company will attract GST under Reverse Charge Mechanism (RCM) as it is covered under the said Entry NO.-6 of Notification No. 13/2017 dated on 28th June’2017 issued u/s 9(3) of the CGST Act’2017.
Conclusion: In our View The Rajasthan Advance Ruling & Karnataka Advance Ruing are both wrong because as per Schedule III Service by an employee to the Employer in the Course of or in relationship to his employment is not the SUPPLY.
And no one Charge the Tax in any manner Forward Charge or Reverse Charge on any Goods & Services which is not cover in Supply in GST Law.
Example: Suppose Mr. A is a full Time Director in ZYZ PVT. LTD. & received Rs. 180000/- per Month then in this case XYZ PVT. LTD. is not liable to pay the RCM as per Schedule III under GST.
If Mr. A is Part Time Director & also give another services to the XYZ PVT. LTD. Then in this case XYZ PVT. LTD. Is liable to pay RCM as per Entry No. 6 of Notification No. 13/2017 dated 28.06.2017