Persons liable for GST registration – Section 22 of CGST Act, 2017

This is one out of a series of articles that will follow onwards. The sole purpose of these articles is to simplify and to present the provisions of GST Laws in a comprehensible manner.

The matter of deliberation in this article is the ‘Registrations under CGST Act, 2017‘.

Registration under GST renders the registered person with a GST identification number called GSTIN. It enables the registered person to conduct the activities of taxable inward and outward supplies and to avail & utilize the tax paid on such inward supplies, know as Input Tax Credit.

Hence, No registration = No ITC utilization

There are other benefits of obtaining registration under GST, such as

• Improved credibility, as a GST registered supplier, within the industry
• Accurate record keeping of details of ITC.
• Legal entitlement for collection of inward tax & to raise a Tax invoice for forwarding the credit of GST on the taxable supplies made.

The chapter VI of the CGST Act, 2017 speaks of Registration under GST. The approach here is to refer to one section at once. Today we are discussing Section 22 of CGST Act, 2017.

Now, The most often & basic question which is asked, by any layman who is not aware about the legal speech & technicalities of GST laws, is that “Who are the persons liable for registration???”

The answer to the question is nothing but as follows, Section 22 of CGST Act, 2017: Persons liable for registration. As per the section,

• 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: (Section 22(1))
  • 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:
  • 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:
  • Provided also that 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 supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified: (refer CBIC Notification 10/2019 CT, dated 07.03.2019)
    • Explanation.––For the purposes of this sub-section, a person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of extending eposits, loans or advances in so far as the consideration is represented by way of interest or discount .
    • For better understanding refer the table.
• Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an existing law, shall be liable to be registered under this Act with effect from the appointed day. (Sec 22 (2))

(The clause was effectively applicable, when the transition to GST law from the erstwhile Sales Tax & VAT regime  had taken place.)

• In case of transfer of business on succession, the transferee is liable to be registered from the date of succession of business. (Section 22(3))
• In case of Amalgamation / Demerger, the transferee is liable for registration from the date of new incorporation under RoC of the DE-merged / amalgamated company. (Section 22(4))

Explanation.––For the purposes of this section,––

• • the expression ―aggregate turnover‖ shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals;
  • 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 referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker;
  • the expression ―special category States‖ shall mean the States as specified in sub- clause (g) of clause (4) of article 279A of the Constitution [except the State of Jammu and Kashmir]47 [and States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.]

For the absolute definition of Aggregate turnover, we refer Section 2(6) of the CGST Act, 2017

“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;

Table simplifying the threshold limits of taxable supplies for the purpose of Sec 22(1)

Aggregate T/o doesn’t include,

• The value of any sort of inward supplies, whether taxable or non taxable, and
• The value of those goods on which Job work is undertaken by job workers. (But the value of services, provided as a job worker, paid for to the job worker are included).