In any tax system registration is the most fundamental requirement for identification of tax payers ensuring tax compliance in the economy. Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail Input tax credit for the taxes on his inward supplies. Without registration, a person can neither collect tax from his customers nor claim any input tax credit of tax paid by him.

Under GST, registrations need to be taken State-wise, i.e. there are no centralized registrations under GST. A business entity having its branches in multiple States will have to take separate State wise registration for the branches in different States. Further, within a State, an entity with different branches would have single registration wherein it can declare one place as principal place of business (PPoB) and other branches as additional place(s) of business (APoB). However, a business entity having separate business verticals in a State may obtain separate registration for each of its business verticals otherwise a given PAN based legal entity would have one registration number – Goods and Services Tax Identification Number (GSTIN) per State.

Why GST Department Is Not Right In Asking Commercial Place For GST Registration?

GST Act stipulates that any supplier of goods, services or both must register as a GST Act if their aggregate turnover of more than Rs. 20 lakhs in a year (Rs.10 lakhs in Special Category States) have to obtain GST registration. If the supplier is only supplying goods, then threshold limit is Rs. 40 lakhs in a year (Rs.20 lakhs in Special Category States) subject to the condition that State has opted for this higher threshold limit. However, 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.

Small businesses with turnover less than 20lakhs can voluntarily register under GST. Voluntary registration provides option to a person to take GST registration even though he is not liable for GST registration under section 22 or section 24 of CGST Act, 2017 or SGST/UTGST Act, 2017. Section 25(3) allows for voluntary registration under GST, “A person, though not liable to be registered under section 22 or section 24 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.”

GST REGISTRATION PROCEDURE:

Procedure for registration is governed by section 25 of the CGST Act read with Chapter III – Registration of Central Goods and Services Tax (CGST) Rules, 2017. Relevant provisions of CGST Rules, 2017 have been incorporated at the relevant places. Further, special provisions have been provided for registration of casual taxable person and non-resident taxable person under section 27. Concept of deemed registration has been elaborated under section 26.

General documents needed for GST Registrations are:

  • Documents
  • PAN and Aadhaar of applicant
  • Proof of business registration
  • Identity and address proof of promoters
  • Address proof of business
  • Bank account proof
  • Digital signature
  • Letter of authorization

CORONA & WORK FROM HOME:

Though the number of people working partially or fully remote has been on the rise for years now, the COVID-19 pandemic may have pressed the fast-forward button on this trend. COVID-19 has lead to more and more employees working from home (WFH). COVID-19 also created many entrepreneurs or small businesses to start work from home. People are loving Work from Home because of flexible schedule, the ability to work from any location, and no more commuting to name a few.

Due to Corona pandemic small business owners work from home at least part of the time. But there is problem in GST while getting your business registered with GST Department.

GST DEPARTMENT VIEW ON RESIDENTIAL ADDRESS:

GST Department, particularly State Department Officers still live-in mindset of Sales Tax era. During Sales Tax Registrations in some states there was requirement of Commercial Address for Sales Tax Registrations. When VAT (Value Added Tax) was introduced generally the registration form all over states had two addresses to be filled one was for Residential Address and another one was Commercial Address. Some State VAT Officers started demanding commercial address and started rejecting applications on residential address. GST was implemented on 1st July’2017 and GST Registration was online. GST Registration Procedure is governed by Section 25 Act and Rule 8 & Rule 9 Rules. Requirement of Commercial Address for GST Registration is not mentioned in GST Laws or any Circular / Notification / Instructions. But then also some State Officers are demanding Commercial Address for GST Registration.

Whether business can be carried from Residential Unit was matter before West Bengal Tax Tribunal in case of Puspa Lohia vs Sales Tax Officer, Durgapur Range [(2009) 21 VST (Tri.) (WB) / (2007) 9 TMI 588 (WBTT)] / (2009) 12 STM 702 (WBTT)] ?

Department made a visit to the registered premises of the assessee and cancelled the Registration on the ground that assessee had no office room to carry on her business and had no godown or warehouse and her declared place of business was a residential premises. Aggrieved by this Cancellation assessee contested and matter went to West Bengal Tax Tribunal.

Assessee asserted that she carried on business at the premises recorded in the registration certificate, maintained records in the office which was also maintained at the said premises, and that she also kept goods imported by her at the said premises. She contended that section 24 of the WB VAT Act, 2003 does not require her to have godown or warehouse and that no restrictions are imposed by the WB VAT Act, 2003 for carrying on business from residents.

Department countered that the place of business is residential place. No office room nor any godown are found there. The place of business is a dwelling house.

Assessee submitted that the taxation law does not require maintenance of godown for obtaining registration certificate and no restrictions have been imposed by sales tax law for maintenance of office and for carrying on business at residential premises.

Section 2(29) of the WB VAT Act, 2003 provides, “place of business” means any place “where a dealer has set up a business of selling or purchasing goods or a place from where a dealer sells any goods or where he keeps accounts, registers or documents, including those in the form of electronic records relating to sales or purchases of goods or execution of works contract and digital signature certificate granted under sub-section (4) of section 35 of the Information Technology Act, 2000 (21 of 2000), relating to his business, and includes any place where the dealer processes, produces or manufactures goods or executes works contract and any warehouse of such dealer”.

West Bengal Tax Tribunal held that, “Where business is carried from Residential Unit and the dealer had not declared any godown, warehouse or separate office, cancellation of certificate of registration on that ground alone not justified.”

NEED OF COMMERCIAL ADDRESS: UNJUST DEMAND

Thus, need of Commercial Address was not there even in VAT Laws. If we recall registration requirements of VAT Laws, they could be as follows:

  • Registration fees ranging from Rs. 500/- to Rs. 1,500/-
  • Security Amount and Later on Additional Security
  • Location Map
  • Introduction by already registered dealer or Advocate or CA

These are not demanded today in GST Laws then why Commercial Address is demanded? Corona Pandemic has done huge loss to mankind both in terms of loss of human life and economy. But “Work from Home” is new norm, and it will continue forever now whether there is corona or not. GST Department need to understand this basic thing and stop demanding Commercial Address. They should stop rejecting Applications for GST Registration for non-submission of Commercial Place. Alternatively, Government could issue some SOP’s in this matter or issue clarification on the same.

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Qualification: CA in Practice
Company: Abhishek Raja and Associates
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Member Since: 18 Aug 2018 | Total Posts: 14
Abhishek Raja Ram - Popularly known as "Revolutionary Raja" is FCA, DISA, Certificate Courses on – Valuation, Indirect Taxes , GST etc, M. Com (F&T) Mr. Abhishek Raja “Ram” is a Fellow member of ICAI, qualified in 2006, and holds Master’s-Degree in Commerce. He has more than a 15 ye View Full Profile

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19 Comments

  1. Omprakash agarwalla says:

    There is no law that business cannot run from residential premises. There are some restrictions from the municipalities in carrying out some businesses from residential premises, but such restrictions cannot be borrowed in GST laws in absence of specific provision. If I start advising my clients from my residence, will the GST authority deny my registration? Certainly not. Having said that, it is also to be agreed that in appropriate cases of business of storing and trading of goods from residential premises, the GST officers need to be more careful while registering some one.

  2. CA Raghav Khandelwal says:

    Sir/Mam, the requirement of separate Business Vertical for obtaining more than 1 registration in one state has been done way with.
    Thank you.

  3. C H Vunga says:

    Good points. On the other hand, should the registered dealer continue to claim Electricity Bills in a much subsidized “residential” category while “commercial connection will cost more?

    1. Respected C H Vunga ji,
      Greetings!!

      Electricity is Governed by State Acts & Rules which vary from one state to another. Some states have given exemptions from commercial electricity connections to Doctors, Lawyers, Architect, CA, CS & CWA’s. They don’t need Commerical Electricity Connection.

  4. Shivram Prasad Vankina says:

    WoW!
    This is an extremely well researched and deeply thought-through article covering all aspects of the issue.
    I could not help but commend you for it.

  5. Shabbir Bhindarwala says:

    In Chennai Application for GST REGISTRATION was rejected even after giving both Residential & Commercial Addresses. The Department required Authority Letter for the Manager who had signed Rental Agreement on behalf of the Shop Owner who had rented the premises.

    1. Mr. Shabbir Bhindarwala, the act by the State Tax Officer is not correct. You can file an appeal against the rejection order. You can also use the decision of Honourable Kerala High Court in the case of M/s FR Trade Links vs The State Tax Officer, Pala where court have held that “GST Authority has No Power to cancel Registration of a person for Reasons not specified in the GST Act”. Hope this helps you

  6. K.K.BANERJEE(ADVOCATE) says:

    Very nice presentation with simple language and examples. It will help a lot to those who wants to go for different aspects of GST ACT.KEEP IT UP IN YOUR FUTURE PRESENTATION OR CITATION 8 DIFFERENT CASE LAWS AND TOPICS UNDER GST ACT.

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