Section 7 of UTGST Act 2017: Levy and Collection of Tax

Provisions under Section 7 of the Union Territory Goods and Services Tax (UTGST) Act, 2017 relating to “Levy and Collection of Tax”, are as under:

Section 7 of UTGST Act 2017: Levy and Collection (CHAPTER III – LEVY AND COLLECTION OF TAX)

(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the Union territory 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 of the Central Goods and Services Tax Act and at such rates, not exceeding twenty per cent, as may be notified by the Central 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 Union territory 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 Central Government on the recommendations of the Council.

(3) The Central 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 Union territory tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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. [Refer Note 1]

(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 Central 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.

Amendments History:

1. Sub-section (4) substituted vide UTGST (Amendment) Act, 2018 (GOI Notification dated 30/08/2018), followed with CBIC Notification 1/2019 dated 29/01/2019 on commencement date of 01/02/2019.

Commentary on Section 7 of UTGST Act, 2017

Section 7 of the Union Territory Goods and Services Tax (UTGST) Act, 2017 outlines the provisions related to the “Levy and Collection of Tax” for intra-State supplies of goods and services within Union Territories in India. The key points of this section are as follows:

Section 7(1) of UTGST Act, 2017

Union territory tax (UT tax) is levied on all intra-State supplies of goods or services, except for alcoholic liquor for human consumption. The tax rate cannot exceed 20% and is determined under Section 15 of the Central Goods and Services Tax Act.

Section 7(2) of UTGST Act, 2017

The UT tax on specific items like petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel will be effective from a date notified by the Central Government based on the Council’s recommendations.

Section 7(3) of UTGST Act, 2017

The Central Government can specify categories of goods or services for which the tax is to be paid on a reverse charge basis by the recipient. The recipient is then treated as the person liable for paying the tax in relation to those goods or services.

Section 7(4) of UTGST Act, 2017

The Government can also specify a class of registered persons who must pay tax on a reverse charge basis for specific categories of goods or services received from unregistered suppliers. The recipient is treated as the person liable for paying the tax in relation to those goods or services.

Section 7(5) of UTGST Act, 2017

In certain cases, the tax on intra-State supplies of services facilitated through an electronic commerce operator (ECO) must be paid by the ECO. The ECO is then treated as the supplier liable for paying the tax in relation to those services.

Further, if an ECO does not have a physical presence in the taxable territory, any person representing the ECO is liable to pay the tax. If the ECO does not have a physical presence or a representative, the ECO must appoint a person in the taxable territory to be liable for paying the tax.

In summary, Section 7 of the UTGST Act, 2017 provides the framework for levying and collecting UT tax on intra-State supplies of goods and services within Union Territories in India. It also sets guidelines for instances when the tax is to be paid on a reverse charge basis by recipients or ECOs and addresses scenarios involving ECOs without a physical presence in the taxable territory.

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Note: The UTGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended  through UTGST (Amendment) Act 2018, Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective UTGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.