Composition Dealer purchasing Scrap/Used vehicles from Government liable to pay tax on RCM basis: AAR

Question on which Ruling is seeked:

1. Can Composition Dealer purchase Scrap/Used vehicles from Unregistered Dealers? RCM on these purchases applicable or not?
2. Any RCM exemption limit amount for purchase of Scrap and Used vehicles from unregistered dealers?

Ruling:

Vide Section 9(4) of the CGST Act, Government may specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both. Notification No.08/2017-Central Tax(Rate) dated 28-6-17 exempts intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the CGST Act, 2017 (12 of 2017) provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds five thousand rupees in a day. The aforementioned notification has been amended vide Notification No.38/2017-Central Tax(Rate) dated 13-10-17 vide which the proviso to the Notification (mentioned in para above) has been omitted. Further, Notification No.7/2019-Central Tax(Rate) dated 29-3-19 notifies that the specified registered persons shall, in respect of supply of goods or services or both, received from an unregistered supplier shall pay tax on reverse charge basis as recipient of such goods or services or both. However, subject goods are not notified vide said Notification 7/2019-CT(R).

1. Composition Dealer purchasing Scrap/Used vehicles from the following Suppliers, namely: Central Government, State Government, Union territory or a local authority are liable to pay tax on RCM basis.
2. There is no RCM tax liability for purchase of subject goods from unregistered dealers.