No Registration is required even if supply of goods is made through an Economic Cooperation Organization (ECO)
As per the amended section 23(2) of the Central Goods and Services Tax (CGST) Act, 2017, suppliers making goods supply through ECOs can now operate without obtaining GST registration, subject to specific conditions. These conditions include not making inter-state supply, limiting supply to one state or Union Territory, holding a valid PAN number, and completing PAN validation on the common portal.
The recent notification no. 34/2023 – Central Tax dated July 31, 2023, emphasizes that without successful PAN validation, an enrolment number won’t be issued. However, a single enrolment number per state/union territory is granted, preventing multiple registrations. In case a supplier later obtains registration under section 25 of the CGST Act, the enrolment number becomes invalid from the effective date of registration. This article delves into the practical implications using a real-world example.
a. Provisions of the Act: As per section 23(2) of the Central Goods and Services Tax Act, 2017, which is effective from 1st October, 2023 (as amended by Finance Act, 2023) provides that a person making supply of goods through ECO shall not be required to take registration where the turnover is up to the limit specified in section 22(1). Limit specified under section 22(1) is 20 lakhs (for other than special category states) / 10 lakhs (for special category states).
b. CBIC through notification no. 34/2023 – Central Tax dated 31st July, 2023 has notified that a person supplying goods through ECO subject to the following conditions is not required to obtain registration w.e.f. 1st October, 2023;
i. Such person shall not make any inter-state supply
ii. Such person shall not make supply of goods through ECO in more than one state or Union Territory
iii. Such person shall have a PAN number
iv. Such person shall be required to get his PAN validated on the common portal by declaring PAN and address of the place of business and he shall be granted an enrolment number after successful validation.
Note: Such person shall not be granted more than 1 enrolment number in the state/ union territory. Without enrolment number, a person cannot make supply through ECO.
v. When, any time subsequent to grant of enrolment number, such person granted registration under section 25 of the Central Goods and Services Tax Act, 2017 then the enrolment number shall cease to be valid from the effective date of registration.
For Example; Parth Medicos is a supplier of medicines supplying through his retails store in the state of Delhi. An application named “MEDO DELHI” is operating which assist the consumers to get the medicines at their doorstep within Delhi. MEDO DELHI is an ECO liable to collect tax under section 52. After receiving the order from the customer, it places the same to the supplier registered with the application. Parth Medicos wants to supply medicines through MEDO DELHI after 1st October, 2023. Does it require registration under GST?
Answer: As per the amended section 23(2) of the CGST Act, 2017, a person can supply through ECO without obtaining registration, subject to the specified conditions. Parth Medicos is supplying goods within Delhi only
Assuming that Parth Medicos is making a supply through ECO in one state only, he is required to obtain enrolment number by getting its PAN and address of the place of business validated on the common portal.
Conclusion: In summary, the amended provisions of the CGST Act, 2017, facilitate ECO supply without GST registration, provided all conditions are met. For suppliers like Parth Medicos, catering solely to a single state like Delhi, obtaining an enrolment number through successful PAN validation is necessary to engage in ECO supply after October 1, 2023. These provisions aim to streamline ECO operations while ensuring adherence to GST regulations.