Applicability of Reverse Charge Mechanism (RCM) on Purchase of
M-Sand, P-Sand, Blue Metals, Boulders, and Hollow Bricks from Unregistered
Persons
(Advance Ruling No.:
30/AAR/2025 / Date of Ruling: 18 August 2025 / Authority for Advance
Ruling: Tamil Nadu / Name and
Address of the Applicant M/s. Amman Blue Metals)
Summary of
the Advance Ruling
The applicant, engaged in
the trading of M-sand, P-sand, Blue Metals, Boulders, and Hollow Bricks,
purchases these goods from unregistered suppliers within Tamil Nadu.
They sought clarification on whether such purchases attract Reverse Charge
Mechanism (RCM) liability under Section 9(3) or 9(4) of the CGST
Act, 2017.
The Authority for Advance
Ruling (AAR), after detailed examination, held that:
- The goods purchased by the applicant
are not covered under the goods notified for RCM under Section
9(3).
- The applicant, being a trader and
not a promoter, is not liable under Section 9(4) of the CGST
Act.
Hence, purchases made by the applicant from unregistered suppliers do
not attract GST under Reverse Charge Mechanism.
Questions
Raised in the Ruling
1. Whether
the purchase of M-Sand, P-Sand, Boulders, Blue Metals, Bricks, and Hollow
Bricks from unregistered persons is liable under RCM as per Section 9(3)
or 9(4) of the CGST Act, 2017?
2. Whether
the goods notified under Section 9(3) specifically exclude the above-mentioned
goods purchased from unregistered persons?
3. Whether
the amended Section 9(4) excludes the applicant from paying tax under RCM for
such purchases from unregistered persons?
Relevant
Legal Provisions
- Section 2(98), CGST Act, 2017
– Definition of Reverse Charge
- Section 9(3), CGST Act, 2017
– Reverse charge on notified goods/services
- Section 9(4), CGST Act, 2017
– Reverse charge on supplies from unregistered persons to notified
registered persons
- Notification No. 04/2017–Central Tax
(Rate) dated 28.06.2017
- Notification No. 07/2019–Central Tax
(Rate) dated 29.03.2019 (effective from
01.04.2019)
Facts and
Submissions by the Applicant
- The applicant is a proprietary
trading concern engaged in wholesale and retail trading of
construction materials like M-sand, P-sand, Blue Metals, Boulders, and
Hollow Bricks.
- The goods are procured from
unregistered dealers within the state of Tamil Nadu.
- The applicant filed an application
under Section 97(2)(d) of the CGST Act, 2017, seeking clarification
on liability under RCM for such purchases.
- The applicant submitted that:
- Under Notification No. 4/2017-CTR,
the goods covered under RCM mainly relate to specific commodities such as
cashew nuts, tendu leaves, tobacco leaves, silk yarn, lottery, used
goods, and metal scrap.
- The goods traded by the applicant
(M-sand, Blue Metal, etc.) do not fall under any of these categories.
- Furthermore, under amended
Section 9(4) and Notification No. 07/2019-CTR, only specific classes
of registered persons, particularly promoters in real estate,
are liable to pay tax on RCM for purchases from unregistered suppliers.
- Since the applicant is not a
promoter, they believe no RCM liability arises on such
purchases.
Personal
Hearing
- The authorized representative,
Shri Vishal Kothari (Chartered Accountant), appeared for the hearing on 23
July 2025.
- He reiterated the written submissions
and clarified that:
- The applicant is not engaged in
construction activity but solely in trading.
- All purchases are made from
unregistered suppliers.
- The Authority inquired whether any of
the suppliers were registered and if the applicant could provide sample
bills. The representative confirmed all suppliers were unregistered
and agreed to furnish sample invoices.
Discussion
and Findings by the Authority
1. Nature of Activity and
Applicability of Section 9(3)
- The Authority examined Notification
No. 04/2017-CTR issued under Section 9(3).
- The notification lists specific goods
such as cashew nuts, tendu leaves, silk yarn, raw cotton, lottery, used
vehicles, metal scrap, etc., which attract tax under RCM when supplied
by unregistered persons.
- The goods traded by the applicant —
M-Sand, P-Sand, Blue Metal, Boulders, Hollow Bricks — do not fall
within any of these entries.
- Hence, RCM under Section 9(3)
is not applicable to these goods.
2. Applicability of
Section 9(4)
- Section 9(4) empowers the Government
to notify specific classes of registered persons liable to pay tax
on RCM for purchases from unregistered suppliers.
- Notification No. 07/2019-CTR,
issued under Section 9(4), identifies “Promoters” (builders,
developers, etc.) as the only category of registered persons required to
pay RCM on:
- Supplies constituting shortfall of
goods or services used in real estate projects, or
- Cement or capital goods used in such
projects.
- The applicant confirmed that they are
not a promoter and are not engaged in construction activities.
- Therefore, the applicant does not
fall under the notified class of registered persons required to pay
RCM under Section 9(4).
3. Conclusion of Legal
Analysis
- The goods traded by M/s Amman Blue
Metals are not notified under Section 9(3).
- The applicant, being a trader and
not a promoter, is excluded from the scope of Section 9(4).
- Accordingly, purchases from unregistered
persons within the State are not liable to RCM under either
provision.
Ruling /
Decision
1. Purchases
from unregistered persons: Purchases of M-Sand, P-Sand,
Boulders, Blue Metals, Bricks, and Hollow Bricks from unregistered suppliers are
not liable to Reverse Charge Mechanism under Section 9(3) or 9(4)
of the CGST Act, 2017.
2. Exclusion
from Section 9(3): The goods traded by the applicant are not
included in the list of goods notified under Section 9(3).
3. Exclusion
from Section 9(4): The amended Section 9(4) and Notification
No. 07/2019-CTR apply only to “promoters” engaged in real estate
development. Since the applicant is only a trader, they are not liable to
pay tax under RCM for such purchases.
Conclusion
The Tamil Nadu Authority
for Advance Ruling held that M/s Amman Blue Metals, a trading concern,
is not liable to pay tax under Reverse Charge Mechanism for purchases of
M-Sand, P-Sand, Blue Metals, Boulders, and Hollow Bricks from
unregistered suppliers.
Neither Section 9(3) nor Section 9(4) applies to their case, as
the goods are not notified under RCM, and the applicant is not a promoter as
defined in the relevant notification.
This ruling provides significant clarity for traders and dealers in
construction materials, confirming that RCM is not applicable on
intra-state purchases from unregistered persons unless the buyer falls within
the notified categories.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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