Chapter III - Levy and collection of tax
Section 7
Section 7: Levy and collection
Section 7 charges Union territory GST on intra-State taxable supplies in the Union territories covered by the Act. The rate for a supply comes from the applicable current notification, not the statutory ceiling.
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Need advice on Section 7?
This article is for general information. Refer to the Union Territory Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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 and un-denatured extra neutral alcohol or rectified spirit which is used for manufacture 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 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.
Introduction
Section 7 is the charging provision for Union territory tax (UTGST). It applies to an intra-State supply in a Union territory covered by this Act; the corresponding central tax is charged under the CGST Act. First establish where the supply takes place, then determine whether the supply is taxable and which rate notification applies.
The section also identifies supplies outside the present levy and situations where someone other than the supplier must pay. Those liability shifts require a notification for the relevant category and transaction date.
Key takeaways
Charge and scope
The levy concerns intra-State supplies in the covered Union territories, with value determined under CGST Section 15.
Statutory exceptions
Alcoholic liquor for human consumption and the specified un-denatured extra neutral alcohol or rectified spirit used to make it are outside this charge. The listed petroleum products await a notified levy date.
Who pays
The supplier generally pays, but notified reverse-charge categories and notified electronic-commerce services can move liability to the recipient or operator.
When the UTGST charge applies
Start with the place-of-supply and supplier-location rules in the IGST Act. If they classify the transaction as intra-State in a Union territory covered by the UTGST Act, Section 7 is the charging provision for its territory-tax component.
The taxable value is determined under CGST Section 15. The twenty per cent figure in Section 7 is an upper limit on a notified rate, not a general invoice rate. Classify the supply and check the applicable notification on its tax date.
Supplies outside the charge and deferred petroleum levy
Subsection (1) excludes alcoholic liquor for human consumption and the specified un-denatured extra neutral alcohol or rectified spirit used to manufacture it. The latter wording was inserted with effect from 1 November 2024; it does not exclude every industrial use of these products.
Subsection (2) separately defers the levy for petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel until a date notified on the Council's recommendation. Check the current legal position for the relevant product and date before treating a supply as subject to UTGST.
Supplier liability and reverse charge
The taxable supplier ordinarily pays the territory tax. Subsection (3) lets a notification assign liability to the recipient for specified supply categories. Subsection (4) concerns specified classes of registered recipients buying specified categories from unregistered suppliers; it is not a blanket reverse charge on every unregistered purchase.
For either reverse-charge route, identify the precise notification and effective date, then retain the invoice and classification evidence explaining why the recipient is liable.
Electronic-commerce operator liability
Subsection (5) can make the electronic-commerce operator liable for notified categories of services supplied through the platform. This is a specific statutory liability rule; merely listing a product or service online does not by itself trigger it.
If the operator lacks a physical presence in the taxable territory, the provision assigns liability to its representative, or requires an appointment for tax payment if no representative exists.
Invoice and return review
For a taxable transaction, reconcile supply classification, value under CGST Section 15, the transaction-date rate and exemption notification, and the identity of the person liable. The invoice and GST return should reflect the same analysis.
A rate exemption under Section 8 and a reverse-charge shift under Section 7 answer different questions: one concerns how much tax is due, the other who pays it.
Practical checklist
Do
- Confirm that the supply is intra-State under IGST Section 8 and is within a Union territory covered by this Act.
- Check the transaction-date UTGST rate and exemption notifications for the goods or services.
- Check whether a reverse-charge or electronic-commerce notification changes who must pay.
Glossary
- Intra-State supply
- A supply classified as intra-State under the IGST Act's location-of-supplier and place-of-supply rules.
- Reverse charge
- A notified arrangement in which the recipient pays tax instead of the supplier.
- Taxable value
- The value computed under CGST Section 15, which Section 7 adopts for the UTGST levy.
Frequently asked questions
Is the 20% statutory ceiling the rate to put on an invoice?
No. Section 7 provides a ceiling; the applicable notified rate and classification determine the invoice rate.
Need help applying this provision to your situation?
Contact BizeneedLast updated 9 October 2026