For the purpose of levy and collection of tax on supply of goods or services or both, persons who are registered or liable to be registered have been made liable for payment of goods and services tax (hereinafter referred to as GST). For the purpose of levy of GST on intra-State supply of goods or services or both, the Parliament has enacted the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act).
A careful reading of the CGST Act reveals that section 22 and section 24 of the said Act provide the details or description of persons who are liable to be registered and section 23 of the Act specifies the persons, or gives power to the Government to notify the persons, who shall not be liable for registration. Section 23 of the CGST Act, with its marginal note “Persons not liable to registration”, runs as follows:–
“Persons not liable for registration.
23(1) The following persons shall not be liable to registration, namely:––
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.”
Section 22(1) and section 24 of the CGST Act, referred to hereinabove, run as follows:–
Section 22(1) of the CGST Act.-
“Persons liable for registration.
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 or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.”
Section 24 of the CGST Act.-
“Compulsory registration in certain cases.
24Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) person who are required to pay tax under sub-section (5) of section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) 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;
(x) every electronic commerce operator;
(xi) every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations of the Council.
Among some people who deal with GST Law there is some confusion about the applicability of section 22(1), section 23 and section 24 of the CGST Act. In their opinion, there is conflict in between the provisions of section 22(1) and section 23, and in between provisions of section 23 and section 24 of the CGST Act. In my personal opinion, there is no such conflict. With due regards to such people, I have a different opinion. In my personal opinion, provisions of section 23 of the CGST Act have been enacted to relieve certain persons or class of persons of their obligation or liability of registration provided under section 22(1) or section 24 of the CGST Act. According to me, persons falling in the following categories are not liable for registration under the CGST Act, namely:–
(i) persons who are not liable for registration in view of the provisions of section 22 or section 24 of the CGST Act; and
(ii) persons who have been exempted from their liability of registration under section 23(1) or persons who may be exempted from obtaining registration by the Government by issuing notification in exercise of its powers under section 23(2) of the CGST Act.
In my opinion, sections 22, 23 and 24 of the CGST Act provide a single scheme of liability of registration. Section 22 and section 24 make certain persons liable for registration and section 23 grants exemption to certain persons from their liability of registration provided either under section 22 or under section 24 of the CGST Act. It is true that provisions of section 22 or section 24 have not been enacted subject to provisions of section 23 but the intent of the Parliament can be gathered from the words used in sub-section (2) of section 23 of the CGST Act. A statute is to be read as a single piece of the Legislation. Sub-section (2) of section 23 provides that the Government may, on recommendation of the Goods and Services Tax Council, specify the category of persons who may be exempted from obtaining registration. English word “exempt”, when it is used as verb, has the meaning of setting free a person or organization from an obligation, duty or liability imposed on others. Therefore, we can conclude that section 23 of the CGST Act has been enacted to provide exemption from liability of registration. In exercise of its powers under section 23(2), the Government has issued several notifications to provide exemption to exemption from liability of registration of various categories of persons, who otherwise are liable to be registered in view of the provisions of section 22(1) or section 24 of the CGST Act.
In reference to interpretation of fiscal statutes (laws dealing with tax), the Honorable Supreme Court, in its judgment in A.V. Fernandez vs. State of Kerala, Judgment dated: April 02, 1957, has laid down as follows:-
“In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.”
We can view the matter in a different manner. We know that if a provision of law provides that persons who make taxable inter-State supply of any goods shall be liable to be registered, it is implied in the provision that persons who do not make taxable inter-State supply of any goods shall not be liable to be registered. It is not required to make a provision in the law to tell the people that persons who do not make taxable inter-State supply of any goods shall not be liable to be registered. Secondly, only a person, who is liable for doing a particular thing, can be declared not liable for doing that thing. If a person is not liable for doing a particular thing, there is no logic in declaring such person not liable for doing that that. The website https://thefreedictionary.com provides meanings of medical terms, legal terms, financial terms, etc. According to legal dictionary, term “not liable” has the meanings of blameless, exempt or immune. Marginal note of section 23 of the CGST Act, which runs as “Persons not liable for registration”, suggests that the section is about the persons who will be exempt from registration. Section 23(1) also lists the persons who will not be liable for registration, i.e. it lists the persons or class of persons who shall be exempt from obtaining registration.
In view of the discussion above, my personal opinion is that provisions of section 23 of the CGST Act have overriding effect over the provisions of section 22 and section 24 of the said Act. Once it is found that a particular person is covered under section 23 of the CGST Act, the provisions of sections 22(1) and 24 of the said Act will cease to apply to such person.
Where a person is liable to do a certain act, declaration that such person shall not be liable to do that act amounts to granting of exemption to the said person from his liability of doing that act.
Disclaimer: Except the quoted versions, all other views expressed here are my personal views and are meant only for academic discussion. Readers are advised to obey the law and to seek opinion of their legal advisors before acting upon the views expressed here. I and the publishers of this article disown any liability on account of any loss or damage that may be caused on account of use of views expressed here.