Goods and Service Tax law in India is a multi-stage, comprehensive, destination – based tax that is levied on every value addition. GST is one Indirect Tax Regime for the entire country and levied on the supply of goods and services. GST replaces many indirect tax laws that was previously prevails in India.
Whereas, due to flooded notifications, circulars, Press release, Amendment, Advance Ruling & many interpretations makes this simple one into cumbersome legislation. It’s quite difficult for each one of us to equip with the latest provisions/ law entails as on date. This article is basically an attempt to make everyone abreast with the latest law of Chapter – VI of CGST Act, 2017.
This article is an effort to articulate following issues in relation to GST Registration:
1. Trigger Point and Aggregate Turnover for Registration
2. Agent and Principal relationship in GST Regime.
3. Cancellation or Suspension of GST Registration.
Sec 22 and Sec 24 of Chapter VI of CGST Act 2017, guides us the provisions as contained in relation to GST Registration. Sec 22 prescribes persons liable for Registration w.r.t Threshold Limit whereas Sec 24 prescribes compulsory registration for certain categories of persons irrespective of threshold limit.
Person Liable for Registration (Sec 22) : It requires every supplier shall be liable to be registered 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 State i.e. he shall be liable to be registered if his Aggregate turnover in a financial year exceeds ten lakh rupees.
Provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified. [Inserted by CGST Amendment Act, 2018]
Points to Ponder:
> Notification No 10/ 2019 – Central tax dated 07.03.2019 provides exemption from registration for any person engaged in exclusive supply of Goods and whose aggregate turnover does not exceeds Rs 40 lakh e. [Applicable w.e.f. 01.04.2019]
> A person shall avail the enhanced Exemption limit when he is engaged in exclusive supply of Goods only. A person shall be considered to be engaged exclusively in the supply of Goods even he is engaged in exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discounts.
> Threshold Limit for Special Category States has been revised and enhanced to Rs 20 Lacs w.e.f. 01-April-2019.
> Place of Supply and place of Business are interchangeably used in order to determine the Registration requirement. Place of Business [Sec 2(85)] are always guides situs and not place of supply.
> Special provisions for Casual Taxable Person or Non Resident Taxable person are prescribed as per Sec 27 of CGST Act, 2017
The word ‘Registration’ was not defined under CGST Act, 2017 but if we dig into the dictionary meaning of the same it implies “ To Put Information, especially your name, into an official list or record”. Sec 22 of CGST Act, prescribes persons liable for Registration whereas persons those are liable for GST Registration under Sec 22 or 24 are taxable person and not registered person. Taxable and Registered Person plays an important role in the entire GST regime.
Sec 22 of CGST Act requires Cumulative conditions needs to be satisfied in order to trigger GST registration i.e. Supplier (+) Supplying Taxable goods or Services (+) aggregate Turnover exceeds the threshold limit.
Earlier Regime of indirect Tax i.e. Service Tax and Excise prescribes the facility of SSP/SSI Exemptions which provided that even though assessee has taken the registration it was not required to collect and pay tax unless they crossed the threshold limit. However, in GST regime no such exemption is provided under the law. Suppose if taxpayer once taken the registration then he is mandatorily required to collect and pay tax to the Government irrespective of threshold limit.
Therefore, it’s a need of an hour to understand what aggregate turnover is before jumping on to another provision. Section 2 sub section (6) of CGST Act defines “aggregate turnover” means the aggregate value of all
– Taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),
– Exempt supplies,
– Exports of goods or services or both and
– inter-State supplies of persons having the same Permanent Account Number,
– to be computed on all India basis
– but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Aggregate Turnover is PAN based i.e. on all India basis and not State/Union Territory based. Aggregate Turnover must be carefully considered while making a determination whether requirement to register has been trigger or not. The Threshold limit of turnover shall include all supplies made by the taxable person whether on his own account or made on behalf of all his principals i.e. supplies made by an agent.
Sec 24 of CGST Act overrides Sec 22 (1) and not section 23 and prescribes the categories of persons who shall be required to be registered irrespective of the threshold limit:
(i) Persons making any inter-State taxable supply
(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 who is required to collect tax at source under section 52
(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 person as may be notified by the Government on the recommendations of the Council.
Sec 24 prescribes 12 categories of persons who shall be required to be registered irrespective of the threshold limit. Persons whose entire turnover is comprised of exempt turnover such persons shall also be liable to be registered if any of the situations listed in sec 24 are applicable. Sec 24 drill down 12 mandatory conditions for compulsory registration under this regime whether such person are making wholly exempt supply or whether their turnover is below threshold limit.
Sec 24 prescribes that any Persons making any inter-State taxable supply are compulsory required to be registered. But there are certain exceptions to this condition:
> Notification No.10/2017–Integrated Tax dated 13.10.2017 as amended vide 3/2019-Integrated Tax dated 29-Jan-2019 w.e.f. 1-Feb-2019 – This Notification provides exemption to the supplier who supply interstate supplies of taxable services where turnover is not exceeding 20 Lacs. This relaxation is extended to such person supplying interstate services only and not goods.
> Notification No. 7/2017–Integrated Tax dated 14.09.2017 as amended vide Notification No. 2/2019-Integrated Tax dated 29-Jan-2019 w.e.f. 1-Feb-2019 – This Notification provides exemption to job-workers making inter-state supply of services to a registered person where aggregate turnover is not exceeding 20 lakh. The relief in terms of GST Registration provides to Small Job Workers making inter-State supply of services.
> Notification No. 3/2018-Integrated Tax, dated 22.10.2018 seeks to supersede Notification No. 8/2017-Integrated Tax, dated 14.09.2017: This Notification specifies categories of persons making inter-State taxable supplies of handicraft goods and having aggregate turnover up to 20 lakh shall be exempted from obtaining registration.
Sec 24 clause (vii) implies that an agent who make taxable supply of goods or services or both on behalf of other taxable persons is required to register irrespective of threshold limit provided under section 22. The term “agent” has been defined under sub-section (5) of section 2 of the CGST Act as “a person including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another”
In this commercial world, due to complex nature of transaction it is very difficult to determine whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal.
In order to determine the relationship under GST we need to look, whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent or not. Where the invoice for further supply is being issued by the agent in his name then Agent principal relationship exist. However, it may be noted that in cases where the invoice is issued by the agent to the customer in the name of the principal then Agent principal relationship does not exist. In other words, the crucial point is whether or not the agent has the authority to pass or receive the title of the goods on behalf of the principal. This matter has also been clarified in the Circular No. 57/31/2018-GST dated September 4, 2018 and also Circular No. 73/47/2018-GST, dated November 5, 2018.
Sec 29 deals with cancellation or Suspension of GST Registration. It provides that The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where-
a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
b) there is any change in the constitution of the business; or
c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24:
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed. [Inserted by CGST Amendment Act, 2018]
The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,
a) a registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or
b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
f) Provided that the proper officer shall not cancel the registration without giving the person
g) Can opportunity of being heard.
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed. [Inserted by CGST Amendment Act, 2018]
Points to Ponder
1. Rule 21 of the CGST Rules, 2017, provides for cases of cancellation of registration and includes the following:
a. does not conduct any business from the declared place of business; or
b. issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules made there under or
c. Violates the provisions of section 171 of the Act or the rules made there under.
d. Violates the provision of rule 10A.
2. Every registered person required to file a final return “within three months” of the date of cancellation or date of order of cancellation, whichever is later, in GST FORM GSTR-10.
3. Notification No. 3/2018-Central Tax, dated January 23, 2018 : It provides that a person who has obtained voluntary registration can apply for cancellation before expiry of one year from effective date of registration.
4. When a registered person applied for cancellation of registration, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.
Disclaimer: The information cited in this article has been drawn from various sources. The information contained in this document is intended solely for dissemination of information and doesn’t aim at soliciting work in any manner. Though meticulous care has been taken but the author assumes no liability in respect of any loss/damage incurred while acting on the basis of information provided.