Common Man’s Guide to Gujarat VAT and CST TIN Registration

BRIEF: A Common businessman always has some kind of dilemma with regard to the VAT TIN and CST TIN which are sometimes referred to as GST in common parlance also. The questions related to VAT TIN and CST TIN registration in Gujarat include: What is VAT and CST, When to register, How to register, Where to register and What is the process of registration etc. This article outlines some common questions of a common man while opting for VAT TIN and CST TIN registration.

INTRODUCTION: The Gujarat Value added tax laws, rules and regulations require a businessman to take registration for VAT TIN and CST TIN when the turnover crosses a specific limit. There are various pre-conditions and pre-requirements for taking a Compulsory registration. However, a Voluntary registration can also be taken when all pre-conditions of taking compulsory registration are not fulfilled. This article will help a common man to understand various basics related to VAT and CST TIN Registration in Gujarat in simple and transparent manner through a Question and Answer Format containing 10 Questions and their 10 Answers. Hence, this series is also named as “SERIES 10 ON 10”.

PART I : A COMMON MAN’S GUIDE TO :

GUJARAT VAT AND CST TIN REGISTRATION

A lot of queries comes to mind when one thinks about taking registration under Gujarat VAT and CST Laws. Some of the queries and their answers are published as follows for the benefits of the readers:

1. What is VAT / CST / TIN / Sales Tax ? 

Answer: VAT means Value Added Tax On Sales. CST means Central Sales Tax. TIN means Tax Identification Number. And Sales Tax is Tax on Sales.  In a Summarized way, in any State Law, two types of registrations are available. First is VAT TIN i.e. Value Added Tax Identification Number, which is required for selling taxable goods within State. Second is CST TIN i.e. Central Sales Tax Identification Number, which is required for selling taxable goods outside state.

2. Who is required to take VAT / CST TIN Registration ? 

Answer: In common parlance, those who are buying and selling taxable goods are required to take VAT and CST TIN Registration. In legal parlance, if the turnover i.e. either Purchase or Sales, exceeds Rs. 5 lacs and taxable turnover exceeds Rs. 10 thousand, then one is required to get registered for VAT and CST in Gujarat. For list of Taxable goods and Exempt Goods (Goods which are not taxable) and various rates at which the goods are taxable.

3. What ALL is required to take VAT / CST TIN Registration ? 

Answer: Anybody can take VAT and CST Registration. The basic documents required are Identity proofs and Address proofs of the dealer. For readers’ information, a VAT and CST registration can be taken on a residential premises, if commercial premises are not available with the dealer

4. Is there any deposit to be kept with VAT and CST Department at the time of taking VAT and CST Registration?

Answer: Yes. A deposit of Rs. 20,000 (i.e. Rs. 10,000 for VAT registration and Rs. 10,000 for CST registration) is to be kept compulsorily with the VAT Department, which is refundable after a period of 2 years from the date of registration. Further, an advance tax of Rs. 25,000 is to be deposited at the time of taking registration, if the dealer is taking voluntary registration and is not having purchase invoices of Rs. 5 lacs (including Rs. 10,000 as a taxable invoice).

5. Is there any other way out for taking VAT and CST registration without making payment of Security deposit ? 

Answer: No. Under Gujarat VAT, one needs to compulsorily deposit at least Rs. 20,000 as VAT and CST Deposit at the time of taking registration and there is no other way out. This a pre-condition for the purpose of getting registered with VAT Department of State of Gujarat. Other States may be having different kinds of pre-condition for the purpose of alloting registration under VAT and CST.

6. What is the rate of tax on various products to be sold ? 

Answer: There are various kinds of rates are applicable for various different kinds of products. The rates are defined based on the nature of products OR based on the users of the product.

7. What is the whole process of taking VAT and CST registration in State of Gujarat ? 

Answer : The application for Registration under VAT and CST can be done by the applicant himself / herself / itself OR through a consultant who can be a Chartered Accountant / Advocate etc. A separate application is required to be filed up for VAT and CST. The application can be done either through an Online Mode or Offline Mode. The application along with the necessary proofs / documents is required to be submitted to Jurisdictional VAT Officer. After a preliminary verification of xerox copies of all the proofs / documents, an acknowledgement will be generated. After that, a HEARING is conducted by Authorised Commissionaire / Officer of VAT, where all the supporting documents / proofs have to be produced in ORIGINAL an are verified by the Authorised Commissionaire / Officer of VAT. After HEARING, a PROVISIONAL VAT and CST TIN is allotted. After allotment of Provisional TIN, a Visit of the registered address is undertaken by a VAT Officer Personally, who gives his opinion on the correctness and genuineness of the address proposed to be registered. After his report to the Authorised Commissionaire / Officer of VAT, the PROVISIONAL VAT and CST TIN gets converted to PERMANENT VAT and CST TIN, which remains Valid till it is cancelled by VAT Department.

8. What is an average time frame within which the VAT and CST TIN can be obtained in Gujarat ? 

Answer: The process of taking a PROVISIONAL VAT and CST TIN takes around 5-10 working days depending upon the work load of the Concerned VAT Department. The Final VAT and CST Certificate is generated within around 15-30 days from the date of Application. As per Internal Circular, the Final Registration Certificate has to be granted withing 30 days from the date of application.

9. Is VAT and CST TIN taken once is applicable for all over India ? 

Answer: No. VAT and CST registration taken is valid only in the State in which it is applied for and taken. VAT and CST Laws are a State Government Subject as per Constitution of India and hence, each and every State in India has a separate VAT and CST Laws, applicable in that state only. Hence, if one wants to sell taxable goods in other State, a separate VAT and CST Registration has to be taken for that State in which the place of business is situated.

10. What are the benefits of taking VAT and CST Registration in Gujarat ? 

Answer: The First and foremost benefit is that as taking registration under VAT and CST is a legal obligation, one is saved from all the legal punitive action taken by VAT Department, in case registration is not taken, when it is required. The Second important benefit is that one, after taking registration can purchase goods from outside state at a discounted rate of tax instead of full rate of Tax. For taking the benefit of discounted rate of tax, one needs to issue Form C / Form F etc. to the seller which will enable the seller to charge a discounted rate of tax in the Sale invoice to be issued to the party, who is registered with the concerned VAT Department.

Hope the readers will be benefited from the above article and most of the queries disturbing the mind at the time of taking Registration under Gujarat VAT and CST will be resolved. Critics are welcome to comment on the above article and Readers are welcome to give comments / suggestions.

(The author is FCA Sachin D Jain, a Practising Chartered Accountant in Surat, Gujarat and is a partner of M/s. Agarwal & Jain, Chartered Accountants. He can be reached at +91-261-3314545 and at caagarwaljain@gmail.com.)

(Author can be  reached at Mob: +91-9687559363 or on email sachindjain@icai.org)