Compulsory Registration under GST

As per the section 24 of CGST Act 2017 , certain categories of persons shall be compulsorily required to be registered under GST, even if their aggregate turnover is below specified exemption limit and are exempted from GST registration under section 22(1) – section 24(1) of CGST and SGST Act.

COMPULSORY GST REGISTRATION : Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act irrespective of the aggregate turnover,––

1. Persons making any inter-State taxable supply :-

A persons making any inter-State taxable supply of goods is required to be registered under GST irrespective of turnover limit

Exemption from compulsory GST registration even making interstate supply :-

(a) A person making inter-state supply of services is not required to register under GST if his aggregate turnover is less than Rs 20/10 lakhs. Notification No. 10/2017-IT dated 13-10-17)

(b) Persons engaged in supply of handicraft goods making inter-state supply are exempt from GST registration, if the aggregate value of all their supplies on all India bases is less than Rs 20 lakhs/10 lakhs per annum.

(c) A job worker with turnover less than 20/10 lakhs is exempt from registration, even if he makes inter-State supplies to registered person. This exemption is not available to Jewellery, goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis – (Notification No. 7/2017-IT dated 14-9-2017 as amended on 29-1-2019) .

2. Casual taxable persons making taxable supply

As per section 24 of CGST Act 2017, a casual taxable person is required to obtain compulsory registration irrespective of the aggregate turnover in the previous year. However exemption has been given to person engaged in the supply of “Handicraft goods”. A casual taxable person making taxable supplies of handicraft goods is exempted from obtaining registration if aggregate turnover to be computed on all India basis not exceeding an amount of 20 Lakhs.

Casual taxable person meaning- As per sec 2(20) of CGST Act means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business

3. Persons who are required to pay tax under reverse charge

A person who is required to pay tax under reverse charge has to take compulsory registration as he has to take registration to submit tax under reverse charge.

The important point should be taken into consideration that Section 24 overrides sec 22 only so any person who is exclusively in the business under section 23 i.e. any person engaged exclusively in the business of supplying goods or services not liable to tax or wholly exempt from tax then he is not required to get himself registered.

A Person engaged exclusively in manufacture of exempted product receiving GTA service which is under reverse charge would require registration under CGST Act in order to discharge his duty liability under reverse charge. (Jalaram Feeds,In re [2019] (AAR – MAHARASHTRA)

In case of mandatory RCM, the service recipient is compulsorily liable to pay tax and all the provision of GST law shall apply to such recipient as if he is the person liable for paying the tax. On account of this, the provisions of section 24 are introduced for mandatory registration in such cases.

4. Electronic Commerce Operator

Electronic Commerce Operator who is required to collect tax at source under section 52;] [The words ‘required to collect ‘ inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019]. Thus, an e commerce operator would require registration only when he is required to collect tax at source under section 52 of CGST Act.

Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52; [Under section 9(5) of CGST Act, Government can notify e-commerce operators who will be liable to pay entire GST]

However, persons who are suppliers of service and supplying services through e-commerce operator are not required to register under GST if their aggregate turnover is less than Rs 20 lakhs per annum (Rs 10 lakhs in case of specified States) – Notification No. 65/2017-CT dated 15-11-2017. This relaxation is not applicable to supplier of goods.

5. Non-resident taxable persons making taxable supply

A non-resident person who is making any kind of taxable supply in the taxable territory then he has to take compulsory registration.

As per section 2(77) of CGST Act 2017,”Non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India;

6. Persons who are required to deduct tax under section 51, whether or not separately registered under this Act

A person who is required to deduct TDS the authorities as notified a department or establishment of the Central Government or State Government; or local authority; or Governmental agencies; or such persons or category of persons as may be notified by the Government are required to get itself registered under GST compulsorily

7. Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise

A person who is working as an agent or otherwise and also making taxable supply then as per section 24 of CGST Act 2017 he has to compulsorily get registered so any kind of agent who is making taxable supply needs to get registered under GST immediately.

As per section 2(5) of CGST Act 2017 “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;

8. Input Service Distributor, whether or not separately registered under this Act

input service distributor has to get compulsory registration under GST. As per 2(61) of CGST Act 2017 “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;

9. Every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person

Summary: As per the above provision if a person is supplying online information and data base access or retrieval from outside India then that person has to get itself registered under GST irrespective of the turnover in the previous year. E.g. Netflix providing services outside India then Netflix has to get itself registered and pay taxes under normal charge.

10. Such other person or class of persons as may be notified by the Government on the recommendations of the Council.

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(Republished with Amendments. Amendments been made by CA Anita Bhadra)