GST Section 9 Explained: Levy, Collection, RCM & E-Commerce Tax under CGST Act

Section 9 of the CGST Act, 2017 outlines the framework for the levy and collection of Central Goods and Services Tax (CGST) on intra-State supplies of goods and services, excluding alcoholic liquor and certain petroleum products. It empowers the government to notify tax rates (up to 20%) and enforce reverse charge mechanisms (RCM) on specified supplies and transactions involving unregistered suppliers.

Additionally, it holds electronic commerce operators liable for tax on notified services supplied through their platforms. Updated in 2024 to include un-denatured extra neutral alcohol and rectified spirit under exemptions, Section 9 remains a cornerstone of GST law, as explained in detail by AUBSP.

Section 9 of CGST Act: Levy and Collection of Tax

Greetings from AUBSP, your trusted companion in decoding India’s taxation laws. Today, we delve deep into Section 9 of the Central Goods and Services Tax (CGST) Act, 2017, which lays the foundation for the levy and collection of CGST. Understanding this section is crucial for every business, tax professional, and GST practitioner.

Let us walk you through the key aspects of this pivotal section, explain its sub-sections in a simple manner, and summarize the legislative and procedural essentials you need to comply with.

Overview of Section 9: What You Need to Know

Section 9 of the CGST Act is the cornerstone of how GST is levied and collected on intra-State transactions. It provides clarity on:

• The taxable event
• Who is liable to pay tax
• Reverse charge mechanism (RCM)
• Special provisions for electronic commerce operators (ECOs)

As AUBSP explains, understanding these elements helps ensure compliance and avoids unnecessary disputes.

Section 9(1): Basic Charge of Tax

This sub-section mandates that CGST shall be levied on all intra-State supplies of goods or services or both, except:

• Alcoholic liquor for human consumption
• Un-denatured extra neutral alcohol or rectified spirit used for making alcoholic liquor

The tax shall be:

• Calculated on the value determined under Section 15 (i.e., transaction value)
• Levied at rates not exceeding 20%
• Notified by the Central Government based on recommendations from the GST Council
• Collected from the taxable person

🔍 Update by AUBSP: From 1st November 2024, the scope of exempt goods under Section 9(1) has been amended to include un-denatured extra neutral alcohol or rectified spirit, aligning with the Finance (No. 2) Act, 2024.

Section 9(2): Tax on Petroleum Products – Deferred Charge

Certain petroleum products are temporarily excluded from the purview of CGST, including:

• Petroleum crude
• High speed diesel (HSD)
• Motor spirit (Petrol)
• Natural gas
• Aviation turbine fuel (ATF)

These items shall be taxed from a future date to be notified by the Government on the Council’s recommendation.

🔖 Note by AUBSP:

This deferred taxation ensures a gradual transition to GST for these sensitive sectors.

Section 9(3): Reverse Charge Mechanism (RCM) – Specific Supplies

Under this provision, the recipient of specified goods or services becomes liable to pay GST under RCM. The Government may notify such categories of supply.

• Applies only to notified goods/services
• Shifts liability from supplier to recipient
• All GST provisions apply as if recipient is the supplier

Section 9(4): RCM on Supplies from Unregistered Persons

This provision empowers the Government to notify a class of registered persons who are required to pay GST on supplies received from unregistered suppliers.

• Applies only to notified classes and categories
• Ensures tax compliance even when suppliers are outside the GST net
• Recipient is liable to pay CGST

Section 9(5): Electronic Commerce Operators (ECO) and Tax Liability

In specific cases, electronic commerce operators are deemed suppliers and thus liable to pay GST on intra-State supplies made through their platform.

Scope:

• Applies to notified services (e.g., passenger transport, housekeeping)
• ECO must pay tax, even if they are just intermediaries

Special Provisions for Non-Resident ECOs:

• If ECO does not have a physical presence in India, the representative becomes liable
• If no representative exists, ECO must appoint a person in India to pay tax

Timeline Table: Section 9 Notifications and Amendments

Conclusion: Why Section 9 Matters

In summary, Section 9 of the CGST Act establishes the framework for how and when CGST is levied. Whether you are a registered supplier, a recipient under RCM, or an e-commerce operator, this section directly affects your tax obligations.

As AUBSP always advises:

Stay updated with notifications and amendments issued by the Central Government in consultation with the GST Council to ensure timely compliance.

We hope this guide clarifies the intricacies of GST Section 9. For more such in-depth explanations, keep following AUBSP.com – your go-to source for simplified, authentic tax guidance.

FAQs on Section 9 of the CGST Act

What is Section 9 of the CGST Act, 2017?
Section 9 deals with the levy and collection of Central Goods and Services Tax (CGST) on intra-State supplies of goods and services.

When did Section 9 of the CGST Act come into effect?
Section 9 came into force on 1st July 2017 via Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.

What is the maximum CGST rate that can be levied under Section 9?
The maximum rate of CGST that can be levied is 20%, as prescribed under Section 9(1).

Is GST applicable on alcoholic liquor for human consumption?
No, GST is not levied on the supply of alcoholic liquor for human consumption under Section 9(1).

What is the 2024 amendment in Section 9(1)?
The amendment excludes un-denatured extra neutral alcohol or rectified spirit used for manufacturing alcoholic liquor from GST, effective 1st November 2024.

Which goods are temporarily excluded from CGST under Section 9(2)?
Petroleum crude, high speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel are excluded and will be taxed from a notified future date.

Who pays tax under reverse charge mechanism as per Section 9(3)?
Under Section 9(3), the recipient of notified goods or services is liable to pay GST on a reverse charge basis.

What is the difference between Section 9(3) and Section 9(4)?
Section 9(3) applies to specific notified supplies, while Section 9(4) applies when registered persons receive supplies from unregistered suppliers, as notified.

Can the government enforce RCM on unregistered supplier transactions?
Yes, under Section 9(4), the government can notify classes of registered persons who must pay tax on supplies received from unregistered suppliers.

Who is responsible for paying GST on services supplied through e-commerce platforms?
As per Section 9(5), the electronic commerce operator is responsible for paying GST on notified intra-State services supplied through their platform.

What happens if the e-commerce operator has no physical presence in India?
A representative in India becomes liable. If no representative exists, the ECO must appoint a person in the taxable territory to pay GST.

Does Section 9 apply to inter-State supplies?
No, Section 9 applies only to intra-State supplies. Inter-State supplies are covered under the IGST Act.

Is the recipient liable to pay GST under Section 9 for all supplies?
No, the recipient is liable only in specific cases under reverse charge provisions (Sections 9(3) and 9(4)) as notified by the government.

Are services provided through platforms like Uber or Zomato taxed under Section 9(5)?
Yes, these are examples where e-commerce operators may be liable to pay GST under Section 9(5), subject to government notification.

How is the value of supply determined under Section 9(1)?
The value is determined under Section 15 of the CGST Act, which refers to the transaction value of the supply.

Can the government change the date for taxing petroleum products under Section 9(2)?
Yes, the government can notify the date for levying CGST on petroleum products based on the GST Council’s recommendation.

Are there any provisions for e-commerce operators without representatives in India?
Yes, they must appoint a person in India who will be liable to pay GST on their behalf under Section 9(5).

Is reverse charge applicable on import of services under Section 9?
No, import of services falls under the IGST Act and not under Section 9 of the CGST Act.

Do provisions under Section 9 apply to composition taxpayers?
Generally, Section 9 applies to regular taxpayers. However, specific reverse charge provisions may also impact composition taxpayers in notified cases.

Who recommends the changes or notifications under Section 9?
All notifications and changes under Section 9 are made by the Central Government based on the recommendations of the GST Council.