In order to get clarity regarding this concept we need to go through registration provisions under CGST Act.
Section 22 of the CSGT Act (PERSON LIABLE FOR REGISTRATION) –
It provides that 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.
Below is the list of states which are assigned special status under Goods and Services Tax Law: Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya Mizoram, Nagaland, Sikkim , Tripura , Himachal Pradesh , Uttarakhand.
Section 23 of the CGST Act ((PERSON NOT LIABLE FOR REGISTRATION)
It provides that the following persons shall not be liable to registration, namely-
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.
Section 24 of the CGST Act (COMPULSORY REGISTRATION)
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;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
It is clear from the above that Section 24 is superseding/overriding provisions of section 22 and not the provisions of section 23
So if an entity is providing only exempt supplies it is not required to get registration as per Section 23 irrespective of mandatory registration specified under Section 24 as Section 24 is overriding only Section 22 but not Section 23.
Similarly, if the Govt., by notification, specify the category of persons, who may be exempted from obtaining registration under Section 23, provisions of section 24 shall not apply on those persons.
Hence, a conclusion may be drawn that a person engaged in Supplying Exempted supplies is not required to get registered for paying liability under Reverse Charge.
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