Confusion on Section 22 – Person liable for GST registration

Due to reducing trend in no. of registration under new indirect tax regime, government had made a lot of efforts to cover more taxpayers under tax bracket. By, informing section 24 ‘compulsory registration’ under GST Act, 2017.

Although, government has covered all the branches/establishment/subsidiary of the taxpayer for separate registration under goods and services tax act, 2017 and after introduction of sec 22 read with sec 2(6) “Aggregate turnover” government also includes all the taxpayer who is majorly dealing in supply of exempt goods & services.

But after detailed analysis of Sec 22 “Person liable for registration” there is confusing point comes there after:-

As per Sec 22(1) ” Every supplier shall be liable to be registered under this act in the state or union territory, other than special category states, from where he makes a taxable supply of goods & services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees.

Analysis: Any person (supplier) is liable for registration in the state/union territory, when supplier is making taxable supply.

Suppose, Mr. Manoj (supplier) is supplying maker(goods) to Mr. Manthan (recipient) in the state of Madhya Pradesh for value of supply of Rs. 18,00,000/- and Mr. Manoj (supplier) also having its branch in another state say Maharashtra, where he is dealing in supply of exempt goods for value of supply of Rs. 3,00,000/-.

Confusion:-  Where Mr. Manoj is liable for registration in both the state or not ??? If Not, whether he is liable for registration in MP??

Analysis:- After reading sec 22, it is clearly seems that the supplier is only liable for registration in any state if the supplier is making taxable supply of goods and services or both. Hence, Mr Manoj (Supplier) aggregate turnover exceeds 20 lakh in a financial year i,.e (18,00,000 + 3,00,000) = 21,00,000, but he is making taxable supply of goods only in MP state. Hence, Mr. Monoj is not liable for registration in Maharashtra state due to supply of exclusively exempt goods.

Mr. Manoj (supplier) is only liable for registration in Madhya Pradesh state due to “Aggregate Turnover”