Intricacies around obtaining GST registration, issuance of revised tax invoices and availing of input tax credit for the period prior to date of registration

Below is a brief discussion around obtaining GST registration, issuance of revised tax invoices and availing of input tax credit for the period prior to date of registration:

Brief background: GST registration can be obtained either mandatorily once a person surpasses the threshold limit as provided under section 22 or if the person is covered under the specific category of persons as provided under section 24 of CGST Act. Issuance of invoices, revised invoices, effective date of registrations, claiming of ITC by person prior to date of registration, claiming of ITC by recipients basis the revised invoices have been much of a talked around matter trade wide and below is a summary surrounding these queries for your perusal. Relevant extract of the concerned provisions is being reproduced hereby as:

Legal provisions and explanations: 

Section 22 ‘Threshold based registration’: 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. 

Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.

 Section 24 ‘Compulsory registration regardless of threshold’: Notwithstanding anything contained in sub-section (1) of section 22, certain categories of persons shall be required to be registered under this Act, mainly being:

1. persons making any inter-State taxable supply

2. casual taxable persons making taxable supply

3. persons who are required to pay tax under reverse charge

4. person who are required to pay tax under sub-section (5) of section 9

5. every electronic commerce operator [who is required to collect tax at source under section 52

6. 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

7. etc. 

GST law does not specifically talk around voluntary registration by a person i.e. when the person is not liable to be registered and yet decides to be covered under this law. However, sub-section 3 of section 25 ‘Procedure for registration’ provides that:

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’.

Therefore, basis the above, it can be inferred that there are two categories of person before applying for GST registrations i.e.

1st: liable to be registered or

2nd: voluntarily registering.

All persons once registered are to be treated at par in terms of rights and obligations as are conferred upon them by GST laws. 

Section 25: ‘Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to registration in such manner and subject to such conditions as may be prescribed’.

 Rule 10(2) of CGST Rules, 2017:The registration shall be effective from the date on which the person becomes liable to registration where the application for registration has been submitted within a period of thirty days from such date.’

Therefore, any person who obtains registrations as per 1st category where application is made within thirty days from his liability to get registered, shall have registration effective from the date of application only.

Revised invoice: In this regard, GST law has introduced a phenomenon of ‘revised invoice’ which can be issued in accordance with rule 53(2) of CGST Rules 2017, relevant extract of the rule being:

Every registered person who has been granted registration with effect from a date earlier than the date of issuance of certificate of registration to him, may issue revised tax invoices in respect of taxable supplies effected during the period starting from the effective date of registration till the date of the issuance of the certificate of registration. 

Provided that the registered person may issue a consolidated revised tax invoice in respect of all taxable supplies made to a recipient who is not registered under the Act during such period. 

Provided further that in the case of inter-State supplies, where the value of a supply does not exceed two lakh and fifty thousand rupees, a consolidated revised invoice may be issued separately in respect of all the recipients located in a State, who are not registered under the Act.’ 

Basis the above it is evident that, revised invoice can be issued for all sort of supplies i.e. B2B, B2C intra-state as well as inter-state. However, above leeway to issue revised invoice shall not be available to a person who is making application u/s 22 or 24 after thirty days of his liability to obtain registration or when he is voluntarily obtaining the registration. In both of these cases, effective date of registration shall be the one when the registration is granted and therefore, issuance of revised invoice for any prior period shall not be possible here.

Claiming of ITC by the person receiving revised invoices: Any person who receives the revised invoices as issued above may choose to claim the ITC on these supplies basis the tax invoice subject to fulfilment of conditions and restrictions as are provided u/s 16 and 17 respectively. Needless to say, such claiming of ITC is only with regards to the B2B transactions and not by the recipients who are unregistered under GST law.

Claiming of ITC by a person (newly registered) for the invoices dated prior to date of grant of registration: It is pertinent to mention here that Rule 46 of CGST Rules 2017 provides the details and particulars which a tax invoice shall contain for enabling the taxpayer to avail ITC basis that document. One of the particular is GST registration details of the recipient and any recipient who has applied for GST registration and his application is under process, shall not be in possession of the GST registration no and rather only TRN and ARN which are not equivalent to GST registration and therefore, ITC cannot be claimed in this case.

To further support our view, reference can be drawn from the fact that once a B2C invoice is issued for a particular supply on a particular date cannot be revised later by the supplier on the premise that later the recipient is registered as the phenomenon of revised invoice applies only for newly registered persons and not for existing suppliers for issuing any revised document.

Trust this helps. Should you require any further clarifications or details, please feel free to revert:

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One Comment

  1. anuragchopra11 says:

    In continuation to above write up, please refer below too:

    However, the above is subject to claiming of ITC through Form ITC-01 in special circumstances provided under section 18(1) (CGST Act), subject to such conditions and restrictions as may be prescribed:
    (a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act.
    (b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration.
    (c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9.
    (d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable.

    *Provided that for clause (c) and (d), the credit on capital goods shall be reduced by such percentage points as may be prescribed.

    A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

    If the value of ITC exceeds INR 2 lacs, then the taxpayer is required to get the records certified from an independent chartered accountant.

    Regards
    CA Anurag Chopra

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