CA Deepak Aggarwal
♣ All existing registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on voluntary basis. Dealers who are below the GST threshold will have option to remain in GST chain.
♣ Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). First 2 digits will be for state code; next 10 digits equal to PAN, 13th digit will be assigned based on the number of registration within a state. 14th digit has kept for future use and last digit will be for check digit.
♣ A threshold of Gross Annual Turnover including exports and exempted supplies below which any person engaged in supply of Goods or Services or both will not be required to take registration, but he can apply registration voluntary. Threshold will be calculated on all India bases.
♣ Registration application must be filed within 30 days from the date of the dealer’s liability for obtaining such registration.
♣ Effective date of registration would be the date of application in all cases i.e. whether the application has been filed within prescribed time limit of 30 days or otherwise.
♣ The taxpayer would be eligible for ITC in respect of all his purchases from the date of application in case application for registration has been filed within 30 days or otherwise no credit will be allowed for the period before registration.
♣ There will be another relatively higher threshold of Gross Annual Turnover to be called Compounding turnover up to which the registered person can opt to pay tax at a specified percentage of the turnover, without entering the credit chain. This will also calculated on all India bases.
♣ Such registered person will neither be allowed to collect tax from his customers nor claim any input tax credit.
♣ Compounding dealers shall remain under compounding scheme till their turnover crosses threshold or they opt for out of the scheme. Such dealers don’t have to apply every year to remain under the compounding scheme.
♣ Any existing taxpayer not under Compounding scheme may opt for Compounding scheme, if eligible, only from the beginning of the next Financial Year. However Compounding dealer may be allowed to switch over to Normal scheme even during the year if they so want, with a condition that they cannot switch over to Compounding scheme again during the same financial year.
♣ Any existing taxpayer under the Compounding scheme upon crossing the Compounding threshold will be switched over to the Normal scheme automatically from the day following the day of crossing the Compounding threshold.
♣ Although the Compounding scheme is only a temporary phase before the taxable person starts functioning as a normal taxable person, separate format has been prescribed for enabling such taxable persons to opt for Compounding scheme.
♣ When the taxable person opts for Compounding scheme he should indicate so in the registration form and GST Common Portal would internally flag him as a Compounding dealer. Later on when he goes out of the Compounding scheme due to his turnover crossing the Compounding ceiling or he opts out of the scheme , the said flag will be removed and he would continue operating with the same registration number, without undertaking any fresh registration.
♣ Irrespective of turnover, if a taxable person carries out any inter-state supply and / or is liable to pay GST under reverse charge, he will be compulsorily required to take registration, he will not be entitled for exemption threshold or compounding scheme.
♣ However, an individual importing service for personal consumption will not be liable to pay GST under reverse charge or register under GST if the GST law so provides.
♣ A unique identification number (ID) would be given by the respective state tax authorities through GST portal to Government authorities / PSUs not making outwards supplies of GST goods (and thus not liable to obtain GST registration) but are making inter-state purchases.
♣ The concept of Input Service Distributor (ISD) presently being followed in Centre’s Law may continue if the GST Law so provides. They would be required to obtain GSTIN for distributing the credit of GST paid on services proposed to be used at multiple locations which are separately registered. This would be an exception/ deviation in case of services only.
♣ In case of enforcement cases, may grant suo moto registration. If such person does not have PAN, the registration would be initially temporary and later converted into a PAN based registration.
♣ For each State the taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity.
♣ Multiple registrations within one State to business verticals [Refer Accounting Standard (AS) 17 issued by ICAI] of a taxable person may also be permitted, subject to all the verticals being on the same scheme of tax treatment. This will be subject to following specific conditions:
♣ Input Tax Credit across the business verticals of such taxable persons shall not be allowed unless the goods or services are actually supplied across the verticals
♣ For the purpose of recovery of dues, all business verticals, though separately registered, will be considered as a single legal entity
♣ A supplier desires to conduct business in a particular State for a limited period, will have to obtain registration in that State for that limited period. Such suppliers are known as casual dealers and shall not be allowed to opt for composition scheme.
♣ Such taxpayers would be required to self-assess their likely liability and deposit the same as an Advance Tax. Such amount would be deposited by way of two Demand Drafts (one for Centre and other for State) which would be returned to the taxpayer after he has discharged his final liability.
♣ A Non-resident Supplier is a person who, in the course of business, makes an intra-state supply of goods or services or both, but is not a resident in the state in which he has applied for registration, but is already registered in any other state. Since the Non-Resident Supplier is already registered in another State, there would be an easy way of registering such entities in the State in which registration is applied as Non-Resident Supplier.
♣ For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal that would be set up by Goods and Services Tax Network (GSTN). The portal will have backend integration with the respective IT systems of the Centre and States.
♣ Once a complete application is submitted online, a message asking for confirmation will be sent through email and SMS to the authorized signatory of the applicant.
♣ Once the application is approved and GSTIN is generated, the same along with Log-in ID and temporary Password will be sent to the authorized signatory.
♣ Online verification of PAN of the Business / Sole Proprietor/ Partner/Karta/Managing Director and whole time directors/Member of Managing Committee of Association, Managing trustee/authorized signatory etc. of the business would be mandatory and without such verification, registration application will not be allowed to be submitted.
♣ Registration will not be allowed without a valid PAN.
♣ The GST common portal shall carry out preliminary verification / validations, including realtime PAN validation with CBDT portal, Aadhaar No. validation with UIDAI, CIN (Company Identification) with MCA and other numbers issued by other Departments through inter-portal connectivity before submission of the application form. Taxpayers would have the option to sign the submitted application using valid digital signatures (if the applicant is required to obtain DSC under any other prevalent law then he will have to submit his registration application using the same). In the absence of digital signature, taxpayers would have to send a signed copy of the summary extract of the submitted application form printed from the portal to a central processing center to be operated by GSTN.
♣ If the copy is not received within 30 days after such reminder being sent, the system will prompt the concerned tax authority to initiate the action for cancellation of the registration.
♣ The application form will be passed on by GST portal to the IT system of the concerned State/ Central tax authorities for onward submission to appropriate jurisdictional officer (based on the location of the principal place of business) along with the following information.
♣ The tax authorities in the Centre and State would have a period of 3 common working days to respond to the application, either conveying approval or raising a query. In case any of the authority neither rejects the application nor raises a query within 3 common working days, then the registration would be deemed to have been approved by both the authorities and the GST Common Portal will automatically generate the registration certificate.
♣ In case either authority raises a query within 3 common working days, applicant will have to respond to the same within next 7 common working days failing which the application will be rejected. After the applicant has responded to the query raised by any authority, a period of another 7 common working days will be given to the authorities to respond to the application.
♣ In case any of the authority neither rejects the application nor raises a query during this period, then the registration would be deemed to have been approved by both the authorities and the GST Common Portal will automatically generate the registration certificate.
♣ In case registration is granted, applicant can download the Registration Certificate from the GST common portal.
♣ Existing registrants are those who are either registered with States or with the Centre or with both. In case of such registrants, the system shall be designed to migrate cleaned and verified data from the existing database to the GST Common Portal and a GSTIN shall be generated.
♣ The process of migration of data must be started sufficiently in advance so that the business of existing registrants does not suffer and transition from the present system to GST is smooth.
♣ In the GST regime, a taxpayer will have to obtain State wise registration. Even within a State, the taxpayer may either opt for a single registration or multiple registrations for different business verticals.
♣ Migrating half-complete and incorrect data from existing registration databases to GST database will adversely impact the reports and intelligence derived out of it. Thus data will have to be collected afresh from the existing taxpayers.
♣ GSTIN can be issued based on State and validated PAN. In case of taxpayers under Excise and VAT, source of data for issuing GSTIN should be VAT data as in most cases Excise assessee will also be registered under VAT. For taxpayers under Service Tax the source of data for issuing GSTIN should be Service Tax.
♣ For Taxpayers Registered under State VAT/Excise GSTIN will be generated by NSDL in case of all VAT TINs where PAN has been validated. Along with a password the GSTIN will be sent to respective State Tax Authorities.
♣ State tax authorities will communicate the GSTIN/password to taxpayers, with instruction to log on the GST portal and fill up the remaining data. State specific data over and above what is contained in the GST Registration Form can be collected after GST registration becomes operational.
♣ The data so collected by GSTN/NSDL will be provided to States so that they can undertake the verification exercise as per their convenience after 1/4/2016 in a staggered manner spread over a period of one to two quarters so that it does affect the working of the tax authorities. This is being suggested as the dealer is already registered with VAT department.
♣ In case, PAN has been validated but the email or mobile numbers of dealers are not available, such dealers may be advised through newspaper advertisement to visit the GST portal.
♣ In case of Service Tax, the taxpayers are not registered under a State, a different approach will have to be adopted. Since all Service Taxpayers have user ID and password and Service Tax has their email IDs, they may advice the taxpayers to intimate State(s) where they would like to get themselves registered in.
♣ GST portal will generate the GSTIN and communicate to Service Tax, which will be communicated to the taxpayer asking him/her to provide remaining data at GST Portal.
♣ Any verification / updation of the information as outlined above would have to be done by the taxable person within a specified period. If the verification/updation is not done within the stipulated period, the GSTIN will be suspended till the taxable person does the needful. Any verification by State / Central authorities can be done after GSTIN is issued.
♣ Capturing registration information is not a one-time activity and any change in critical information should be entered at the common portal within a stipulated time period. Except the fields mentioned in Para 7.2 (7) above i.e. suspension, changes to other registration data can be done on self-service basis .
♣ The changes in suspension status and a change to Compounding scheme will require submission of reasons and prescribed relevant documents, and will be subject to approval by the concerned tax authorities. All amendments in the details in registration application form will be retained in the database of the GSTN and will be made visible to the tax authorities.
♣ In the following cases, the registration can be either surrendered by the registrant or cancelled by the tax authorities: (1) Closure of business of tax payer; (2) Gross Annual Turnover including exports and exempted supplies (to be calculated on all-India basis) falling below threshold for registration; (3) Transfer of business for any reason including due to death of the proprietor of a proprietorship firm; (4) Amalgamation of taxable person with other legal entities or de-merger; (5) Non commencement of business by the tax payer within the stipulated time period prescribed under the GST laws.
♣ In case of surrender, the system will send an acknowledgment by SMS and e-Mail to the applicant regarding his surrender of registration and he will be deemed to be unregistered from the date of such acknowledgement. There will be a provision in the system to prompt such surrendered registrants to update their address and mobile number at a prescribed periodicity till all dues are cleared/refunds made.
♣ The cancellation of registration may be done by tax authorities in the following situations: (1) In case signed copy of the summary extract of submitted application form is not received even after a reminder; (2) In case a tax payer contravenes specified provision of the GST law; (3) In case a taxpayer has not filed any return at all during a predetermined period (say six months). In case a taxpayer has filed a nil return continuously for this period, then the provisions of cancellation will not be applicable.
♣ The cancellation of registration may be preceded by system generated notice giving 7 days time for furnishing reply by the taxpayer. Principle of natural justice to be followed before cancellation, i.e., giving an opportunity to taxpayer to be heard and passing of order.
♣ If the taxpayer approaches the tax authority for revocation of surrendered or cancelled registration, the surrendered / cancelled registration can be revoked. The action for revocation would be initiated by that Authority which has cancelled the registration or had earlier accepted the surrender of registration.
♣ The action for revocation / cancellation of registration would have to be initiated by both Centre and State tax authorities. Once the registration is cancelled by one authority it would be deemed to be cancelled by other authority also.
♣ The cancellation or surrender of registration would always have prospective effect.
(Author can be reached at [email protected])