The Union Finance Minister Nirmala Sitaraman chaired the 49th meeting of the GST Council today, at Vigyan Bhawan, New Delhi. The Key Highlights from the Council Meeting, include a clarification on the Goods and Services Tax levy on Services provided by courts.
Reverse charge is applicable on certain activities of courts/tribunals, the GST Council noted. However, it was clarified that only the activities of commercial nature rendered by the Registries of Courts and Tribunals, such as renting out of premises will attract GST under Reverse Charge Mechanism.
The Council clarified that “It has been decided to extend the dispensation available to Central Government, State Governments, Parliament and State Legislatures with regard to payment of GST under reverse charge mechanism (RCM) to the Courts and Tribunals also in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers etc.”
The Reverse Charge Mechanism (RCM) is a concept under the Goods and Services Tax (GST) system in India where the recipient of the goods or services is liable to pay the tax to the government instead of the supplier. In other words, under RCM, the burden of paying the tax shifts from the supplier to the recipient.
Section 9(3) of the Central Goods and Services Tax (CGST) Act, 2017: This section provides that the government may notify certain supplies of goods or services or both, on which the tax is payable on reverse charge basis by the recipient of such goods or services.
Section 5(3) and 7(3) of the Integrated Goods and Services Tax (IGST) Act, 2017: These sections provide that the tax on the supply of goods or services or both, under the reverse charge mechanism, shall be paid by the recipient of such goods or services. In the matter of Goods and Services Tax Levy on Courts, the 49th Goods and Services Tax Council meeting has clarified that the levy of tax is applicable only for services of commercial nature, such as renting out of court premises by the Registry of Courts and Tribunals.
