Liability for Registration (Section 22) : According to Section to 22(1) of the CGST Act, 2017, If the Supplier makes a taxable supply of goods or service or both from his State or Union territory and his aggregate turnover in a financial year exceeds 20 lakhs rupees, he shall be liable to be registered.

From the above definition, it is clearly seen that taxable supply shall be made from the suppliers´ state, However suppliers´ state shall depend on the definition given under 2(85) ” Place of Business”

Place of business has been defined under section 2(85) of the CGST Act to include the following:-  

(a) a place from where the business is ordinarily carried on and includes a warehouse, a godown or any other place where a taxable person stores his goods, provides or receives goods and/or services

(b) a place where a taxable person maintains his books of account or

(c) a place where a taxable person is engaged in business through an agent

However, As Per definition of place of business, it is clearly seen that for GST Registration.

Place where the business of supplier ordinary carries on plays a crucial role. Another question raised after reading above definition is that If a person carries business from one or more places, Whether separate registration required for all such places???

We have  to make an analysis of another definition covered under section 2(50) ” Fixed Establishment”

As per the definition under Section 2(50) of CGST Act, these are as follows :

(a) Sufficient degree of permanence (temporary presence of staff by way of a short visit cannot be called a fixed estadlished.

(b) Suitable structure to supply and receive service

(c) Suitable structure to use the services supplied for its own needs

(d) Adequacy of the arrangement of human and technical resources to carry out an activity for consideration.

From the above definition and as per section 25(5) of the GST Act, It is clearly seen that the establishment of a taxable person shall also be considered as his place of business and required separate registration under GST Act 2017.

Section 25 (5) If a person obtains separate registration with same PAN number within State, these will be treated as establishments of distinct persons for the purposes of CGST Act

They will be treated as separate taxable persons for all purposes of GST, including free supply, tax invoice, job work, returns, payment of taxes, etc

From the above definitions, the government brings a lot of clarity on the registration process so that every taxable person comes under levy of GST and one of the benefits of GST Act i.e “boyocacy to Govt. revenue” has been achieved.

But after detailed analysis and interpretation of sec 10(1)(a), 10(1)(b) and 10(1)(c) of IGST Act 2017 “The place of supply of goods, other than supply of goods imported into, or exported from India” again creates confusion and litigation regarding GST Registration process.

Below given Section 10 of IGST Act 2017.

(a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient;

(b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;

(c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient;

Following litigation come after a detailed analysis of section 10 of IGST Act 2017.

1) Whether the taxable person (Registered in Rajasthan) providing work contract services for installation, commissioning, fabrication, fitting of instruments and IT jobs to the township at Karnataka state shall required separate registration in Karnataka state??? If Yes, then the supplier of input goods(registered in Rajasthan) to a taxable person(i.e person providing work contract services) would charge IGST by complying provisions of sec 10(1)(a).

2) If a taxable person (Registered in Rajasthan) shall not get registration in Karnataka state as per the above question. Whether the Supplier of input goods(registered in Karnataka) to a taxable person(i.e person providing work contract services) would charge IGST/CGST/SGST by complying provisions of sec 10(1)(b) or not?????.


(All comments shall be analyzed and Solution to above litigation will  be published in next post)

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  1. Vinay Sonpal says:

    The distinction between the inter state and intrastate supply depends on the place of supplier and place of supply (and not place business of recepient).Whether the supplier is registered in Rajasthan or Karnatake is immaterial. In first querry place of supplier is in Rajasthan and place of supply is Karnataka , and hence IGST will be leviable even if bill is issued at the address of recepient at Rajasthan . In case place of supplier, in second querry,is in Karnataka and movement starts from Karnataka to Karnataka it shall be intra state supply. This is my quick analysis and you may comment if it requires to be corrected. Thanks for analysis of various sections with lots of efforts.

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October 2020