1. Introduction: Registration requirement under GST is to enable the Government to manage the tax collection and data analytics purposes. Registration is the most fundamental requirement for identification of tax payers ensuring tax compliance. To maintain uniformity in tax gathering procedures, assessment and to keep track of returns filing, proceedings and closure of proceedings, the registration helps the administration. PAN based registration is prescribed to avoid duplicate registrations, and to track unregistered potential tax payers. Different types of registrations are prescribed like voluntary registration, compulsory registration, suo-moto registration, threshold based registration, multiple registration, and business vertical registration. There is option for cancellation or deregistration under prescribed situations.

2. Registration under CGSTis specified under chapter VI section 22 to 30 of CGST Act. IGST Act falls back on CGST by virtue of section 20 (v) on registration matters. State GST law also provides for registration on similar lines of CGST Act. The fundamentals for registration are being supplier, taxable supply of goods or services or both, aggregate turnover in a financial year, categories of persons specified under section 24 who are compulsorily registrable. Section 24(i) of CGST states as follows:

Section 24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act, –

(i) persons making any inter-State taxable supply;

Section 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. (specified limits.)

3. Every supplier shall be liable for registration under the CGST Actin the State from which he makes a taxable supply of goods or services or both. It is important to note that registration is required in the State from which taxable supplies are made. Registration is not mandatorily required in the State to which taxable supplies are made. If the supplies are to another State, then the nature of tax will be IGST and is paid to the Centre who will transfer the same to the destination State. Therefore, for purposes of obtaining registration, it is important to identify the origin of supply even though GST is a destination based tax. Even though tax belongs to the destination State under GST, but registration is in the origin State. Place of Supply as per IGST Act provides for the destination and this is not guiding principle for registration. The location of supplier is relevant for registration. The State from where taxable supply is made is a question of fact. It is the geographical area and that must be determined based on the requirement of law. In case of goods trail of movement of goods is available in Chapter 4 of IGST relates to determination of nature of supply. In case of services specific definitions help us to identify the location of origin as well as destination. Determination of nature of supply as interstate is tabulated herein:

Inter-State supply of goods Sec 7(1)
Import of goods treated as Inter-state(customs limits) Sec 7(2)
Inter-State supply of services Sec 7(3)
Special category of inter-State supplies (a) when the supplier is located in India and the place of supply is outside India Sec 7(5)(a)
(b)  where the supply is ‘to’ or ‘by’ an SEZ developer or unit Sec 7(5)(b)
(c) Any supply not being an intra-State supply in the taxable territory Sec 7(5)(c)
Import of services treated as Inter-state Sec 7(4)

In the case of services, location of supplier of services is defined in section 2(71) of CGST Act but in the case of goods, location of Supplier of goods is not defined. Services in most cases, leave no trail as to the location from where they are supplied, whereas goods leave a trail where the goods are actually located.IGST Act defines Fixed establishment under section 2(7), other than a place where registration is obtained. Location of recipient of services under 2(14), location of the supplier of services under 2(15) are also related to supply of services and supply of goods are not covered under these two definitions.

 Definition  Registered place of business  IGST  CGST
 Fixed establishment  excluded  sec 2(7)  sec 2(50)
 Location of the recipient of services  included  sec 2(14)  sec 2(70)
 Location of the supplier of services  included  sec 2(15)  sec 2(71)
 Place of business ( inclusive…)  to be identified for registration Sec 20 (CGST applies)  sec 2(85)
 “Place of supply”  ——— under chapter V of IGST Act  sec 2(86)

4. Place of Business(Section 2(85) of CGST Act) is where business is ordinarily carried on – this would be the location from where taxable supplies are made, whether for goods or for services. This definition includes place where goods are stored. Hence, location of supplier of goods is where business is ordinarily carried on or where the goods themselves are located. Place of supply is not to be interchanged with place of business. It is the place of business that guides situs for registration and not place of supply. This is obvious when we look at the “BILL TO SHIP TO” transactions. Place of Business is not the same as Place of Supply. Registration is required at the place of business and not necessary at place of supply. On a plain reading it may sound strange. Fact is that the two places may be different locations. Registration requirement is not for all the places but the situs decided by law i.e. place of business.  “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act; This is fixed as per legal connotation depending upon stated circumstances. Both the places may be same, at times they may be different. They may be with in one state or may be in different states. Where ever both the places are with in one state there is no confusion so as to decide about STATE in which to get registered. But wherein the places are in different states doubts are expressed whether registration is required in BOTH or ALL the states. Multiple registrations in different states causes concerns. It carries the burden of compliance in multiple states. Unless all the facts of the case are analysed the issue cannot be addressed adequately. This write up is an effort to look at the scenarios with recent legal developments.

5. Place of supply is required to determine the type of tax that is to be charged. When the location of supplier and the place of supply are in different States, it will be an inter-State supply and IGST would be charged. And when they are in one State, then it is intra-State supply and CGST/ SGST/UTGST would be charged. Place of supply is to decide the destination of supply. It is so understood under the principle of destination tax. Destination based tax is not defined but understood by sufficient implication under GST law.

Section 22(1) of the CGST Act 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 Jurisdiction-

in the State or Union territory from where

Section 22(1) of any SGST Act Every supplier making a taxable supply of goods or services or both in the State shall be liable to be registered under this Act if his aggregate turnover in a financial year exceeds twenty lakh rupees Jurisdiction- IN THE STATE

6. Rule 8 of CGST rules prescribe registration process under GST. FORM GST REG-01 at column 16 require to mention place of business. – “16. (a) Address of Principal Place of Business Building No./Flat No. Floor No. Name of the Premises/Building Road/Street City/Town/Locality/Village District Taluka/Block State PIN Code Latitude Longitude (b) Contact Information Office Email Address Office Telephone number STD Mobile Number Office Fax Number STD (c) Nature of premises Own Leased Rented Consent Shared Others (specify) (d) Nature of business activity being carried out at above mentioned premises (Please tick applicable) Factory / Manufacturing ¢ Wholesale Business ¢ Retail Business ¢ Warehouse/Depot ¢ Bonded Warehouse ¢ Supplier of services ¢ Office/Sale Office ¢ Leasing Business ¢ Recipient of goods or services ¢ EOU/ STP/ EHTP ¢ Works Contract ¢ Export ¢ Import ¢ Others (Specify) ¢. Thus it is clear that place of business has its own purpose primarily for jurisdiction and registration. Place of supply is for identifying the category of tax i.e. IGST/CGST/SGST/UTGST. Place of business may be in one state or may be in multiple states. Supply may be made from different places. Once registration is obtained each registered person operate independently for all compliances under GST. Inter office transactions may have no financial implications under accounting, but for GST purpose transactions are to be identified and explained. Tax applicable has to be levied, of course eligible ITC may be claimed at eligible office of registered person.

7. Issues and Concerns for registration in different states:  Trading activity in different states may not pose much of a problem for planning interstate transactions. Bill to ship tomodel may be convenient way to ease out and relieve from multiple registrations. Persons carrying works contract activities, have a principal place of business in one State. They may obtain registration in that state. Further   may undertake execution of works across India in many States. The contractor may procure and stores his goods at the site (in another state) and thereafter carries on the construction work at the site. Alternatively, it may also happen that the contractor does not keep any of his goods at the site and merely procures goods as and when required for construction under progress in another state. Now, as per section 2(85), a “place of business” is defined “…to include any other place, where a taxable person stores his goods or receives goods or services…” Hence, in case the taxable person stores his goods at the construction site, it will be considered as his place of business and he will be liable to take registration at the construction site. If such activities are carried on in multiple states, registrations in all such states causes compliance burden. There appears to be possible way of carrying out works contract in different states out of one single registration in any one state. This situation however calls for careful planning and facts of the case are to be crafted well to satisfy compliance.

8. Recent Advance ruling issued by Karnataka AAR in KAR/ADRG/18/2020 dated 31.03.2020 is pertinent to note in respect of interstate business transactions of works contract, ITC and registration requirement. One of the issue raised before AAR and the relevant facts are – the applicant is registered in Rajasthan state, got a works contract in Karnataka for electrical, instrumentation and IT jobs. Whether registration in Karnataka is required or is it optional? – that was the issue. The text of queries are:

a. Whether separate registration is required in Karnataka state? If yes, whether agreement would suffice as address proof since nothing else is with the Assessee and service recipient will not provide any other proof?

b. If registration is not required in Karnataka state and if we purchase goods from dealer of Rajasthan and want to ship goods directly from the premises of dealer of Rajasthan to township at Karnataka, then whether CGST & SGST would be charged from us or IGST by the dealer of Rajasthan?

c. If registration is not required in Karnataka state and if we purchase goods from dealer of Karnataka to use the goods at township at Karnataka, then whether IGST would be charged from us or CGST & SGST by the dealer of Karnataka?

d. What documents would be required with transporter to transit/ship material at Karnataka site from dealer/supplier of Rajasthan and in case of dealer/supplier is of Karnataka.  Advance ruling may kindly be issued in case of registration is required or not required in both the situation?

e. Ruling: The AAR rules that registration in Karnataka is optionalon the part of the applicant. We need to keep in mind all the requirements of the Act before planning this option.

9. In the above AAR the applicant,who sought advance ruling in Karnataka as works contract supplier, the supply will be based on the theory of annexation as held in earlier decisions under works contract both under VAT laws and service tax. The works contractor sources goods from various places, with in Karnataka and outside, collects them, store them at worksite and thereafter in the course of work transfers them to the customer. The question arises which is the place of business (state to be identified for registration) from where the supply of WC services effected. There is definitely something more to look in to the concept of storage of goods and subsequently transfer in WC services. Does it mean that since it is a contract for WC services, the nature of goods incidental to that service need not be looked into to decide the registration requirements? The answer is YES because the supply is evidenced by invoice relating to terms of contract as source document.

10. Ruling of AAR Maharashtra in GST-ARA-112 /2018-19/B- 40 Mumbai dated 15.04.2019– The applicant was engaged in manufacturing and trading activity. They had registrations under GST in various states. Other than Maharashtra state, they had only trading activity and imports to ports of other states and supply from the ports stated to be IGST transactions. Based on such facts the queries were raised as follows (in brief):

a. Whether the applicant requires registration in each State separately? – NO on the basis of facts stated therein.

b. Whether the applicant can adopt the procedure to raise the invoice from Mumbai Head Office/Registered Office at Mumbai for imports received at various ports, located in various states in India and charge IGST from Mumbai to our customers in various state is proper or not. – NOT ANSWERED

c. If we cancel separate registration in various state can we do the transaction on Mumbai Head Office GSTN, then in case of issuance of E – way bill is it correct to mention the GSTN of Mumbai and mention dispatch place of port of respective state/port- NOT ANSWERED

The question that were not answered based on limitation of legislative mandate under section 97 of GST Act. It gives sufficient clue to conclude that registration is required on at the place of business (Maharashtra) and not required in every state which may be place of supply in such other states.

11. Conclusion: Registration under erstwhile law like Central Excise, VAT, Entry tax etc., was on different situations and were not PAN India basis. Under Central Excise UNIT based registration was required. Under VAT each state required separate registration in spite of prevailing Central Sales Tax law. Under GST place of business is the basis for registration. The rulings of AAR also support the clear understanding beyond any doubt. This is welcome stem and relief from hardship to persons who has business in different states. Still with proper planning and care they can restrict registration to one state. Of course it is optional to have additional registrations based on facts of each case.

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March 2021