GST: Liability of Registration & Payments thereof

Vishal Sancheti

GST –DO YOU KNOW ???

LIABILITY FOR GST REGISTRATION & GST PAYMENTS :

1. As per Sec 22 of the CGST Act 2017 (“the Act”), every supplier (including his agent) who makes a taxable supply i.e. supply of goods and / or services which are leviable to tax under GST law, and his Aggregate turnover in a financial year exceeds the threshold limit of 20 lac/10 lac rupees shall be liable to register himself in the State or the Union territory from where he makes the taxable supply.

2. As per sec 2(6) of the Act “aggregate turnover” includes the aggregate value of:

all taxable supplies,
all exempt supplies,
Exports of goods and/or service, and,
All Inter-state supplies between Distinct persons having same PAN.

Note :

i) Under existing laws for Computation of Turnover limit for the purpose of SSI exemption of Rs 10 lakhs vide Notification No. 33/2012-ST dated 20.06.2012, exempted or export turnover has to be excluded but same is not the case in GST as there is no exclusion for Exempted or export turnover for calculation of Threshold limit of 20/10 lac for Registration

ii) Intra state supplies between distinct persons (i.e. More than one Registration within the state for different business verticals) not to be included in aggregate turnover.

iii) The definition uses the term exports of Goods or services and not Zero rated supplies thus the supplies to SEZ developer or unit which are not chargeable to GST has to be excluded for the purpose of Computation of aggregate Turnover

iv) The above shall be computed on all India basis and excludes taxes charged under the CGST Act, SGST Act, UTGST Act, and the IGST Act. Aggregate turnover shall include all supplies made by the Taxable person, whether on his own account or made on behalf of all his principals.

v) Aggregate turnover does not include value of inward supplies on which tax is levied on reverse charge basis, so value of reverse charge has to be excluded.

vi) Unlike existing laws there is no Centralised Registation in GST laws & the separate registration has to be obtained in each of the states where the taxable supplies are made. More than one registration can also be (optional) obtained in 1 state if there are different business verticals.

3. Further as per Sec 22(2) the persons who are already registered under Existing laws as defined in Central & State GST Acts, say Service Tax, Central Excise, Customs or VAT Acts shall be compulsorily liable to be registered/ Migrate under GST whatever their turnover may be. The question arises whether a person by chance  have only EXIM Number under existing laws and is not having any other  Registration under existing laws whether he is liable to Migrate & compulsorily pay GST. For the time being let us keep this question open.

4. There is a threshold turnover exemption limit of 20/10 lac under GST for persons migrated from existing registration. Voluntarily they can pay GST from the very first supply wef 01.07.2017 after they have /migrated to GST and has obtained GSTIN No or they may cancel their registration if they are not liable to registration under the GST Act. This cancellation has to be made within 30 days from the appointed day and  shall be submitted electronically in FORM GST REG-29 at Common Portal.

5. Section 24 of the Act mentions certain categories of suppliers, who shall be liable to take compulsory registration even if their aggregate turnover is below the said threshold limit of 20 lakh rupees. They are :

=> Persons making any Inter-State supplies (this includes Inter State Supplies to Distinct Persons)

=> Casual taxable person as defined in Sec 2(20) making taxable supply

=> Person required to pay tax under Reverse charge as per Sec 9(3) of CGST Act.

=> Non Resident taxable person making taxable supply

=> Person liable to deduct tax u/s 51

=> Person who makes taxable supplies for other taxable person as an Agent

=> Input service distributor

=> Persons supplying goods through Electronic commerce operator liable to TCS

=> Electronic Commerce operator

=> Online info & Database service from abroad to unregistered person in India

=> Other persons as may be notified by the government

6. Briefly the reverse charge tax as per Sec 9(3) of CGST Act is payable in following cases where the compulsory registration is required by receiver of goods/services. Refer Not No. 13/2017 & 04/2017- CGST(rate) for Services & Goods respectively

*GTA Services to person mentioned in S.No 1 to Not 12/2017- CGST (rate)

*Services of an Advocate to Business entity having turnover above 20 lac/10 lac in the preceeding financial year

*Services by Arbitral Tribunal to Business Entity

*Sponsorship Services to Body Corporate or partnership firm

*Various services by govt / local authority to Business entity excluding services specified at S.No.5 to Not 12/2017-CGST (rate)

* Registered person purchasing Cashew nuts not shelled or peeled, Bidi wrapper leaves (tendu), tobacco leaves from an agriculturist,

* Registered person purchasing Silk yarn from any person who mfg silk yarns from raw silk or silk worn cocoos.

*Lottery distributor or Selling Agent purchasing lottery from State govt, UT or Local authority

7. One needs to be very careful while transacting business wef 01.07.2017 as once you are liable to register by virtue of forward charge or reverse charge transactions covered under sec 22 or 24 you have to compulsorily pay the GST as there is no threshold limit of Rs 20 / 10 lac for payment . Threshold limit is available only for registration so if any person is liable for registration under sec 22 or 24 they would be  liable to be charge & pay GST on Supplies subsequent to registration irrespective of the value of supply made by them excluding NIL Rated, Exempted & Zero rated supplies.

8. It may so happen that a person deals in only Intra state supplies & have annual turnover below 20 lakhs but he may also be required to take registrations in special circumstances of sec 24 including reverse charge notifications issued under Sec 9(3). In such case he becomes liable to pay GST subsequent to obtaining registration irrespective of his intra state supply turnover.

9. In GST Era the Input Tax Credit is seamlessly available to the receiver of Supply thus he or she would prefer to transact business with the registered dealer so as to  avoid reverse charge GST under sec 9(4), thus to be in competition & to avoid loosing of business the GST registration is advisable

10. Who is not liable to Registrations under GST :

=> Sec 23 Specifies any person who is exclusively in the business of supplying goods or services which are not liable to tax or wholly exempted from tax under CGST or IGST Act is not liable to Registration. Further the Agriculturist supplying produce out of cultivation of land is also not liable to registration.

11. Procedure for Registrations:

The detailed procedure is provided in sec 25, 26, 27 of CGST Act along with special provisions for Casual taxable person & Non Resident Taxable Person

12. Who is liable to pay GST?

In general, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies under Sec 9(3), the liability may be cast on the recipient under the reverse charge mechanism. Further, in some notified cases of intra-state supply of services, the liability to pay GST may be cast on e-commerce operators through which such services are supplied. Also, Government Departments making payments to vendors above a specified limit [2.5 lakh under one contract as per Sec 51(1)(d)] are required to deduct tax (TDS) and E-commerce operators are required to collect tax (TCS) on the net value [i.e. aggregate value of taxable supplies of goods and/or services but excluding such value of services on which the operator is made liable to pay GST under Section 9(5) of the CGST Act,  2017] of supplies made through them and deposit it with the Government.

13. Exports / Supply to SEZ Unit

Exports / Supply to SEZ Unit will be treated as zero rated supplies. No tax will be payable on exports of goods or services

14. Distinct persons

As per section 25(4) of the Act, a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

15. Case Studies:

In the following examples Whether :

1) Registration of GST is required & how GST has to be paid ?

CASE 1 :

Comments : All of the above supplies has to be included for the purpose of calculation of aggregate turnover. Total turnover is below Rs. 20 lakhs thus no registration is required as per sec 22 but compulsorily they have to register u/s 24 as there is an Inter State Supply. The Tax liability of GST would arise from the first transaction when he became liable to registration under sec 24. The application for registration can be applied within 30 days. Please Note that providing Intra state supplies in more than one state does not make the person liable to registration if the total turnover is within 20 lakhs and no activities are done to be covered under compulsory registration u/s 24.

CASE : 2

Comments: Total turnover is above Rs. 20 lakhs, but as supplies to SEZ though Zero rated supply is not includible to compute aggregate turnover registration is not  required under sec 22. But as there is an Inter-state supply to Distinct person covered under compulsory registration u/s 24 the GST registration has to be obtained. The  Tax liability of GST would arise from the first transaction when he became liable to registration under sec 24. The application for registration can be applied within 30 days.

CASE: 3

Comments: Total turnover is above Rs. 20 lakhs, but still registration is not required under sec 22 as supplies to SEZthough Zero rated supply & Intra state supplies to Distinct person is not includible to compute aggregate turnover. Thus excluding Supplies to SEZ & to distinct person the total aggregate turnover is 17 lac  exempting registration in current year. Representational Services from Advocates to  Business entity having turnover above 20 lakhs are covered under Reverse charge GST but Legal opinion from Advocate are not covered under Reverse charge. So No registration required u/s 24 also. If in the said example Representational services would have been availed from advocate instead of Legal Opinion Service depending on the Aggregate Turnover of preceding financial year whether above 20 lac registration has to be obtained for payment of GST on Reverse charge.

CASE 4:

Comments: Total turnover is above Rs. 20 lakhs, but still registration is not required under sec 22 as supplies to SEZ though Zero rated supply & Intra state supplies to Distinct person is not includible to compute aggregate turnover. Thus excluding Supplies to SEZ & to distinct person the total aggregate turnover is 17 lac exempting registration in current year. There is a payment to unregistered dealer above Rs 5000 thus GST has to be paid by receiver of Goods only if he is registered. In this case as No GST registration bcz Aggregateturnover below 20 lac thus no  Reverse charge payment for value of Goods of Rs 25000/- purchased from unregistered dealer as transaction not covered u/s Sec 9(4). Further the Reverse charge tax payable for purchases from unregistered dealer does not mandate registration under GST for unregistered person unless he is covered by Sec 22 & 24.

CASE 5:

Comments: The total turnover is above 20 lakhs thus covered u/s 22 but taking the shield of section 23, registration not required as dealing is exclusively in exempted goods. And also, GTA service provided for agriculture produce is exempt u/s 11 (S.No 21 of Not 12/2017- CGST (Rate), so no RCM on GTA & he is not liable to take  registration u/s 24 also . Further though as a Casual Taxable person compulsory registration is to be obtained u/s 24 but as Agriculturist is specifically exempted from registration u/s 23, he would be exempted from registration as casual taxable person also.

CASE 6:

Comments: The total turnover is above 20 lakhs thus covered under u/s 22 but taking the shield of section 23, registration not required as dealing is exclusively in exempted goods. And also RCM for GTA service availed not applicable as not received by a Registered dealer thus he is not liable to take registration u/s 24 also (See S.No 1, Column 4, point (d) to Notification 13/2017- CGST (Rate)

CASE 7:

Comments : The assess will be liable for registration u/s 22 as total turnover is above Rs. 20 lacs and thereby has to take a two separate registration for each branch i.e. for Nagpur at Maharashtra and for Ahmedabad in Gujarat. There is no concept of Centralised registration under GST.

CASE 8:

Comments : The assess will be liable for registration u/s 22 as total turnover is aboveRs.25lacs and they have an option to register both the units as separate business verticals within one state of Maharashtra or else they can include both the units in single registrations in Maharashtra as additional place of business.

CASE 9:

Comments: As the Band do not have the fixed place of business in Delhi they have to take registration in Delhi as a casual taxable person u/s 24 and pay tax on 1 lakhs. This do not affect the position of Maharashtra where the receipts are below 10 lakhs and no registration and GST payments are required. Alternatively the band would have taken registration at Maharashtra and Billed IGST to Delhi Client, in such case
the subsequent supplies in Maharashtra would also become taxable

CASE 10:

Mr. Alex, an engineer from USA, comes to India and provides engineering services to Infosys and charge Rs.5 lacs.

Since, Alex is a non-resident and is providing a taxable service in India, he has to compulsorily take registration u/s 24.

Check GST Common portal for More Information