Think of Section 9 as the "on/off switch" for GST. Before the government can collect even a single rupee of tax, this section must authorize it. It answers three fundamental questions: who pays, on what, and at what rate.
The basic charge (sub-section 1): CGST is levied on all intra-State supplies of goods, services, or both. The value is computed under Section 15, and the rate is capped at 20% (current standard rates are 5%, 12%, 18%, 28% — all within this ceiling). The taxable person — the registered supplier — pays this tax. Two categories are deliberately kept outside this charge: alcoholic liquor for human consumption (taxed by states under VAT even today) and the five petroleum products (crude oil, HSD, petrol, natural gas, ATF), whose GST levy date is yet to be notified. This is a classic exam trap — petroleum is NOT exempt; it's just deferred.
Reverse Charge Mechanism — RCM (sub-sections 3 & 4): Normally, the supplier pays GST. Under RCM, the recipient pays instead. Sub-section 3 covers notified categories of supply — for example, a lawyer providing legal services to a company; the company pays GST, not the lawyer. Sub-section 4 (currently suspended) dealt with purchases from unregistered suppliers by registered persons — the registered buyer would pay GST on behalf of the unregistered seller. When RCM applies, the recipient is treated as if they are the supplier for all compliance purposes.
E-Commerce Operators — ECO (sub-section 5): Platforms like Swiggy or Uber are sometimes made liable to pay GST on services supplied through them, even though the actual service is rendered by a restaurant or cab driver. This is called the deemed supplier concept. If the ECO has no physical presence in India, its local representative pays; if there's no representative either, the ECO must appoint someone. This is asked frequently as a 4-mark question in the context of who is liable when services flow through an app-based platform.
📊 Worked example
Example 1 — Forward Charge (Basic Levy)
Rajesh & Co. Pvt. Ltd. (Mumbai) sells office furniture worth ₹2,00,000 to a buyer in Pune (both in Maharashtra — intra-State supply). GST rate notified: 18% (CGST 9% + SGST 9%).
| Particulars | Amount |
|---|---|
| Transaction value (Section 15) | ₹2,00,000 |
| CGST @ 9% | ₹18,000 |
| SGST @ 9% | ₹18,000 |
| Total invoice value | ₹2,36,000 |
Rajesh & Co. (supplier) collects and deposits ₹18,000 CGST + ₹18,000 SGST. This is straightforward Section 9(1) levy.
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Example 2 — Reverse Charge (Sub-section 3)
Ms. Iyer runs a law firm (unregistered, turnover below threshold). She provides legal advisory services worth ₹5,00,000 to ABC Pharma Ltd. (a registered company in the same state).
Normally, Ms. Iyer would collect and pay GST. But legal services by an individual advocate to a business entity are notified under RCM (Section 9(3)).
| Particulars | Amount |
|---|---|
| Value of legal service | ₹5,00,000 |
| CGST @ 9% payable by ABC Pharma | ₹45,000 |
| SGST @ 9% payable by ABC Pharma | ₹45,000 |
ABC Pharma Ltd. pays ₹90,000 GST directly to the government. Ms. Iyer raises her invoice at ₹5,00,000 without adding GST. ABC Pharma can later claim Input Tax Credit of ₹90,000, subject to conditions.
Final answer: Tax liability = ₹90,000 on ABC Pharma (recipient), NOT Ms. Iyer.
⚠️ Common exam mistakes
- Petroleum = Exempt? Wrong. Students confuse "levy deferred" with "exempt." Petrol, diesel, ATF, crude oil, and natural gas are NOT exempt from GST — GST on them will apply from a date to be notified. Currently they remain outside GST, but that's different from exemption.
- Alcoholic liquor vs. petroleum — mixing up the reason. Alcohol is kept permanently outside CGST (states tax it). Petroleum is temporarily deferred. Don't write the same explanation for both.
- Assuming RCM under 9(4) is active. Sub-section 9(4) (unregistered supplier RCM) is currently suspended by notification. If an exam question asks about its provisions, answer the law. If it asks about current applicability, say it's suspended.
- Forgetting the 20% cap. The bare Act says rates shall not exceed 20%. If an exam question asks the maximum permissible CGST rate, the answer is 20%, not 28% (28% is the combined GST rate; CGST alone would be 14%).
- ECO liability confusion. Students write that the e-commerce operator is always liable. Wrong — ECO liability under 9(5) applies only for notified categories of services (e.g., passenger transport, restaurant services through apps). For goods sold on Amazon by a third-party seller, it's still the seller who pays GST.
📖 Bare Act text — Section 9, CGST Act 2017
(click to expand)
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. (2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council. (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. (4) The Government may, on the recommendations of the Council, by notification, 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, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services: Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
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