1. GST Registration is the most important step to run the network of Goods & Services Tax 2017. GST Registration is governed by Section 22 to 30 of the CGST Act, 2017, Rule 8 to 18, and Rule 25 to 26 of CGST Rules 2017. This article covers the provisions related to ‘Person liable to be registered under GST’ under Sec 22 of the CGST Act 2017.
2. Statutory Provisions related to GST Registration:-
| Section 22(1) | Every supplier shall be liable to be registered in the State or Union Territory (other than special category states) from where he makes the supply of goods or services or both if his aggregate turnover in a financial year exceeds Rs. 20 lakhs |
| First proviso to section 22(1) | Threshold limit of aggregate turnover for the Special Category States:- In the case of ”special category states ‘ registration is required if aggregate turnover in a financial year exceeds Rs. 10 lakhs. [CGST (Amendment) Act, 2018, w.e.f. 1-2-2019] |
| Explanation (iii) to section 22 | Special Category States means States as specified in Article 279A(4)(g) of the Constitution of India other than J&K, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand [CGST (Amendment) Act, 2018 w.e.f. 1-2-2019] |
| Second proviso to section 22(1) | 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 vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019.] |
| Third
The proviso to section 22(1) |
The Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of the supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified |
| Explanation to section 22(1)
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A person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in the 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 discount.
Calculation of exemption of Rs. 40 lakhs will be excluding interest on deposits, loans, and advances. The small taxable persons with aggregate turnover up to Rs. 40 lakhs are not required to register under the CGST Act. It is provided that the Calculation of exemption of Rs. 40 lakhs will be excluding interest on deposits, loans, and advances. |
| Explanation (i) to section 22(1) | Aggregate turnover the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his account or made on behalf of all his principals |
| Explanation (ii) to section 22(1) | The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the Principal, and the value of such goods shall not be included in the aggregate turnover of the registered job worker |
| Section 22(2) | Every person who, on the day immediately preceding the appointed day, is registered or holds a license under existing law, shall be liable to be registered under this Act with effect from the appointed day. |
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Section 22(3) |
Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. |
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Section 22(4) |
In a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal |
3. Person liable to registered under GST- Simplified Analysis
3.1 Registration is required at a place ‘from where supply’ is made. Registration is required only at the place where the supplier of service (or even goods) has a ‘fixed establishment.’
3.1.1. Fixed establishment” means a place (other than the registered place of business), which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs – section 2(7) of IGST Act and section 2(50) of CGST Act.
3.2. Registration is required if aggregate turnover in a financial year exceeds Rs. 20 lakhs. :- In the case of ‘Special Category States,’ registration is required if aggregate turnover in a financial year exceeds Rs. 10 lakhs.
3.2.1. Special Category States includes the State of Assam, Arunachal Pradesh, J&K, Himachal Pradesh, Uttarakhand, Manipur, Mizoram, Sikkim, Meghalaya, Nagaland and Tripura
3.2.2. The Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover from ten lakh rupees to such amount, not exceeding twenty lakh rupees
3.2.3. Some special category States such as Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand have requested GST Council to increase the exemption limit to Rs 20 lakhs. Thus, Thresholds limit of registration for these states is Rs 20 Lakhs
3.2.4. For Jammu and Kashmir, the limit was Rs 20 lakhs and continues to be Rs 20 lakhs, even after 1-2-2019.
3.3. The Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of the supplier who is engaged exclusively in the supply of goods.
3.3.1. The GST Council, on considering the demands raised by MSME, increased the threshold limits for GST registration. An option was provided to the states to opt for the new limits or continue the earlier ones (Status Quo).
3.3.2. The normal Category States who opted for a new limit of Rs.40 lakh are Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, J&K, Assam, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal.
3.3.3. States opted for the status Quo in the Normal Category States are Kerala and Telangana
3.3.4 The Special Category States who opted for a new limit of Rs.20 lakh are Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh, Uttarakhand.
3.3.5 Two hilly states J&K and Assam, have also opted to raise the limit to Rs.40 lakh. These two states had the option to remain under lower threshold limits as they fall under the Special Category Status.
3.4 A person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in the 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 discount.
3.4.1. Calculation of exemption of Rs. 40 lakhs will be excluding interest on deposits, loans, and advances. The small taxable persons with aggregate turnover up to Rs. 40 lakhs are not required to register under the CGST Act. It is provided that the Calculation of exemption of Rs. 40 lakhs will be excluding interest on deposits, loans, and advances.
3.4.2 For example, A person engaged in the supply of goods & his aggregate turnover is Rs 38 lakhs. He is also engaged in supplying loans, and interest income from such a loan is Rs 5 Lakhs. As per explanation to sec 22(1), he is considered to be engaged exclusively in the supply of goods, and interest income of Rs 5 Lakhs will be excluding for threshold limit of Rs 40 lakhs. He is not required to take registration under sec 22(1) of the CGST Act 2017.
3.4.3 However, this exclusion is not available while calculating exemption limit of Rs 10/20 lakhs
3.5 Aggregate turnover the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his account or made on behalf of all his principals
3.5.1 The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the Principal, and the value of such goods shall not be included in the aggregate turnover of the registered job worker
3.6 Every person who, on the day immediately preceding the appointed day, is registered or holds a license under existing law, shall be liable to be registered under this Act with effect from the appointed day.
3.7 On transfer of a business as a going concern, the transferee, shall be liable to be registered with effect from the date of such transfer .
3.7.1 In a case of transfer pursuant to amalgamation or de-merger of two or more companies by order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal
3.8 Once a taxable person is registered under GST Act, he is bound to pay GST, even if turnover is below the prescribed limit (of Rs. 40/20/10 lakhs) or even if it is a voluntary registration.
4. Advance Rulings related to GST Registration
4.1 A separate registration to multiple companies functioning in a ‘co-working space: It was held by AAR Kerala (2019) in re Spacelance Office Solutions P Ltd that there is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office if landlord permits such sub-leasing as per agreement. Thus, separate GST registration can be allowed to multiple companies functioning in a ‘co-working space,’ and such companies shall upload rental agreement with landlord and lessee as proof of address of the principal place of business of respective suit or desk number assigned to them.
4.2 Imported goods landed at a port in other State does not require registration in that State – In Sonkamal Enterprises (P.) Ltd., In re [2018] (AAR – Maharashtra) , the applicant is registered in Mumbai and received goods imported at Haldia Port, Kolkata. It was held that procedure to raise invoice from Mumbai Head Office for such imports is correct and no separate registration in the State of West Bengal is required. Since as an importer place of supply for applicants will be Mumbai, and goods also will be cleared on the name of Mumbai registered address while paying IGST at the time of Customs Clearance, it would follow that they can do further transaction mentioning GSTIN of their Mumbai office. Hence, they can do transactions on Mumbai Head Office GSTIN and can mention GSTIN of Mumbai Head Office in E-way Bill and dispatch place as Customs Warehouse, Kolkata.
GST registration not mandatory in each State where the taxable person has godown – In Gandhar Oil Refinery (India) Ltd., In re[2019] (AAR – MAHARASHTRA), applicant company was engaged in the trading activity of non-coking coal and manufacturing activity of petroleum products and had godowns in various states, from where the applicant was making a taxable supply of goods. It was held that the location of the applicant is Mumbai, where it is registered. Even if the applicant has godowns in different states, the applicant can clear goods based on invoices issued by the Mumbai Head Office/Registered Office on payment of IGST in the State of Maharashtra, and they need not take separate registration in other States.
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Part 15 of the series will cover the topic “Person not required to registered under GST Sec 23 of CGST Act 2017
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Very helpfull article