Registration under Model GST Law- Analysis of Proposed Law

 Introduction:

In this article, provisions relating to Registration under GST as given (Draft) Model Goods and Services Act, 2016 (“GST Act”) and Draft Goods and Services Tax – Registration Rules (“Rules”) are presented.

Liability to be registered as per Chapter VI of GST Act:

(I) Section 19 – Registration

♠ Person is liable to register under this Act as per Schedule III (Same is discussed below). Registration has to be done in every such state where he is so liable within 30 days from the date on which he becomes liable.

♠ For the persons registered under earlier laws (except Input Service Distributor): Fresh registration under GST in not required and will get automatic registration based on PAN as per the procedure prescribed in Rule 14 of GST Registration Rules. (Same is discussed below in the ‘Rules’ segment)

♠ A person having multiple businesses in the same State may obtain separate registration for each business in accordance with Rule 4 of GST Registration Rules.

♠ Voluntary registration is also available under the GST Regime.

♠ Every person should have PAN as given under Income Tax, to be eligible for registration under GST. For NRI who does not have PAN would be eligible for registration with some other equivalent document as may be prescribed.

♠  Once the registration is accepted, Certificate of registration & Unique Identity Number (GSTIN) shall be granted.

(II) Schedule III – Liability to be registered:

♠  Threshold Limit (As per Draft Model GST Law / As decided by the GST Council in their meeting):

Every Supplier will be liable to register under the Act in the “State” from where he makes a taxable supply of goods and/or services only if his aggregate turnover in a financial year exceeds Rs. 9 Lakhs / Rs. 20 Lakhs. However, this limit is Rs. 4 Lakhs / Rs. 10 Lakhs for the Supplier conducting business in NE states including Sikkim.

Comment:  If a supplier’s turnover is less than the threshold limit per annum, he would not be covered under the GST Regime.

Definition of Supplier – Means a person supplying goods and/or services includes agent acting on behalf of the supplier in relation goods and/or services supplied.

Definition of Aggregate Turnover – Means aggregate value of all taxable and non-taxable

• Supplies, Exempt supplies and Exports of goods and/or services
• of a person having the same PAN,
• to be computed on all India basis and
• excludes taxes, if any, charged under the GST.

Comments:

• Aggregate Turnover does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies.
• Supply of goods by a registered Job-Worker after completion of Job-Work shall be treated as supply made by the Principal and value of such goods shall not be included in the aggregate turnover of Job-Worker.

♠ Person shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.

♠ Persons registered under earlier laws are liable to get register from the effective date (appointed day) of the Act.

♠  Mandatory registration irrespective of threshold limit stated above:

 (III) Section 19A of Chapter VI of GST Act – Special provisions relating to Casual Taxable Person & Non-resident taxable person

♠  Validity period of certificate of registration issued will be only for 90 days and the same can be extended upto 180 days on request to appropriate officer.

♠  If a person is registered under earlier law (except Input Service Distributor), fresh registration under GST in not required and procedure for transformation for such cases would be prescribed in course of time.

♠ At the time of submission of application, Causal Taxable Person or Non-resident Person would be required to advance deposit the estimated tax liability. Such amount deposited shall be deposited in the electronic ledger of such person.

(IV) Section 21 of Chapter VI of GST Act – Provisions relating to Cancellation of registration

♠  Scenarios of Cancellation:-

I. The Officer on his own or on the basis of an application filed by the registered person or by his legal heirs in case of death may cancel the registration on account of following circumstances:

a) Disposal or discontinuance of business or amalgamation or demerger.

b) Change in constitution of the business

c) Person is no longer liable to registered other than voluntarily registered person.

II. The Officer may cancel registration with effect from any anterior date i.e., date earlier than existing date on account of following circumstances:

a) Contravention of the provisions of Act or Rules.

b) Person under composition scheme has not filed returns for 3 consecutive tax periods.

c) Any person other than under composition scheme has not filed returns for a continuous period of 6 months.

III. Where any person has obtained registration by means of fraud, willful misstatement or suppression of facts, the Officer may cancel the registration with retrospective effect.

♠  The cancellation of registration under this section shall not affect the liability of the taxable person to pay tax and other dues for any period before to the date of cancellation as determined.

♠  Stock of Inputs or Work in Progress held by registered taxable person as on the date of cancellation, he will be liable to pay input tax credit availed or output tax payable on that, whichever is higher.

♠  For the capital goods held, the taxable person shall pay the amount of input tax credit availed as reduced by some percentage points as may be prescribed or tax payable on the transaction value of capital goods, whichever is higher.

GST Registration Rules:

Background:

♠  GST Registration Rules have been discussed in five segments as follows:

                                I.            Registration of Person existing under earlier laws.

                              II.            New Applicant registration.

                            III.            Amendment of registration.

                            IV.            Cancellation of registration.

                              V.            Revocation of cancellation of registration.

                            VI.            General / Common rules.

♠  Basic Points:

a) All the e-applications discussed in below segment have to be filed at Common Portal either directly or through a Facilitation Centre, as notified by the Board or Commissioner.

b) Digital Signature Certificate (DSC) would be required for e-signing the applications.

Segment I – Registration of Person existing under earlier laws (Central Excise, Service Tax, Respective VAT)

Rule 14 – Procedure for migration of persons registered under earlier law:

• Every person registered under earlier law having a PAN will get registration on provisional basis and certificate of registration in Form GST REG-21 and
• After obtaining provisional registration, e-application for regularization of registration in Form GST REG-20 has to be submitted within the period of 6 months (As given u/s 142 of GST Act).
• If the information & particulars submitted in the above application are found correct, the Officer shall issue the certificate of registration in Form GST REG–
• If the information & particulars submitted in the above application are found incorrect, the Officer shall issue a show-cause notice in Form GST REG-23 and give a reasonable opportunity of being heard to the concerned person and then finally cancel the provisional registration by issuing an order in Form GST REG–
• Persons who are registered under earlier law but not liable to be registered under GST Act, then he may file e-application in Form GST REG-24 for cancellation of automatically granted provisional registration. The Officer after conducting enquiry as required shall cancel the said registration.
  

Segment II – Procedure of registration of new applicant

Rule 1 – Application for registration for new applicants:

Every person liable to register u/s 19 except 1) Non-resident taxable person, 2) Person who is required to deduct tax u/s 37, 3) E- Commerce Operator is required to follow the below prescribed procedure:

• E-Application form for registration – Form GST REG-01
• Online validation of PAN, Mobile Number and E-Mail ID through Part A of Form GST REG-01
• After successful validation, online application in Part B of Form GST REG-01 has to be submitted along with the specified documents.
• On receipt of application, acknowledgment shall be issued electronically in Form GST REG-02.
• For Casual Taxable person, acknowledgment in Form GST REG-02 shall be issued only once the advance deposit of tax is made as per Section 19A.

Rule 2 – Verification of the application:

• Application submitted would be examined by the Officer and approved if found correct within 3 working days. In case of no action by the officer, the application submitted would be deemed to have been approved
• In case of deficiency in the application submitted, Officer would intimate the applicant in Form GST REG-03 within 3 working days and applicant shall submit clarification in respect of information provided and documents submitted in Form GST REG 04 within 7 working days of intimation.
• When the officer is satisfied with the clarification, he would approve the registration within 7 working days else would reject the application and intimate the applicant electronically in Form GST REG-05. In case of no action by the officer, the application submitted along with the clarification would be deemed to have been approved.
  

Rule 3 – Registration Certificate:

• Certificate of registration has granted u/s 19 shall be issued under Form GST REG-06.
• Effective date of Registration:

 Rule 5 – Application of Registration for the person required to deduct tax u/s 37 and E Commerce Operator:

Person who is required to deduct tax u/s 37 and E- Commerce Operator is required to follow the below prescribed procedure:

• E-Application form for registration – Form GST REG-07.
• After the verification by Officer, registration certificate in Form GST REG-08 shall be issued within 3 working days.
• When the concerned person is no longer liable to be registered, the Officer may cancel the registration and issue Form GST REG-08 for such cancellation.
  

Rule 8 – Application of Registration for Non-resident taxable person:

Non-resident taxable person is required to follow the below prescribed procedure:

• Submit an e-application for registration in Form GST REG-10 at least 5 days prior to commencement of the business.
• Acknowledgment in Form GST REG-02 shall be issued only once the advance deposit of tax is made as per Section 19A.
• The provisions of Rule 1 and Rule 2 relating to verification and grant of registration shall apply mutatis mutandis to an application made under this rule
  

Rule 16 – Extension in period of operation by casual taxable person and non-resident taxable person:

• For extension of period of registration, the casual taxable person or non-resident taxable person has to submit e-application in Form GST REG-25 before the end of validity of earlier registration granted to him.
• Above application shall be acknowledged only after the advance deposit of tax is made as per Section 19A.

Segment III – Amendment to registration

Rule 9 – Amendment to registration

• For amendment of the details submitted in the original application, the registered taxable person has to submit an e-application within 15 days in Form GST REG-11 along with the documents related to change.
•  Scenarios of changes:

•  In case the Officer feels that the amendment is not warranted or application submitted is incorrect, then he issue a show-cause notice in Form GST REG-03 within 15 working days and applicant shall submit clarification in respect of information provided and documents submitted in Form GST REG 04 within 7 working days of intimation.
• In case of no action by the officer, the application submitted along with or without the clarification would be deemed to have been approved.
  

Segment IV – Cancellation of Registration

Rule 11 – Application for cancellation of registration by self:

• The registered taxable person has to submit e-application in Form GST REG-14 including the details of closing stock and liability thereon along with the other required documents for cancellation of registration.
• Voluntarily registered persons cannot apply for cancellation before expiry of one year from grant of registration to them.
• Every taxable person other than person paying tax under composition scheme has to file a final return.

Rule 12 – Cancellation of registration by Officer:

• When the Officer believes that the registration of the person is liable to be cancelled u/s 21 of GST Act, then issue a notice in Form GST REG-15 with show cause period of 7 days.
• When the Officer is satisfied about the application submitted by the person for cancellation of registration u/r 11, then he may issue an order in Form GST REG-16 within 30 days of application and direct the person to pay arrears of tax, interest or penalty as determined u/s 21.

Segment V – Revocation of cancellation of registration

Rule 13 – Revocation of cancellation of registration:

• The taxable person whose registration is cancelled may submit an e-application for revocation of cancellation of registration in Form GST REG-17 within 30 days of cancellation order.
• Application for revocation would not be entertained if the registration is cancelled on account of failure of furnishing of return unless the same are filed along with payment of due taxes, interest and penalty as applicable.
• On satisfaction, the Officer may issue an order for revocation of cancellation of registration in Form GST REG-18 within 30 days.
  

Segment VI – General / Common rules

Rule 7 – Display of registration certificate and GSTIN:

• Certificate of registration has to be displayed in a prominent location at his principal place of business and also at every additional place of business.
• GSTIN has to be displayed in the name board exhibited at the entry of his principal place of business and also at every additional place of business.
  

Rule 17 – Physical verification of business premises in certain cases:

In case the Officer requires the physical verification of business premises before granting registration, he may do so and submit the verification report in Form GST REG-26 in the online portal on the same of day of verification.

Table of List of Forms under GST Registration Rules:

Conclusion:

• Under GST Regime, all the processes relating registration have become online with less manual filings.
• Benefits of centralized registration for Services Tax assesses as present under current regime is not available under GST Regime.
  

Disclaimer:

The above analyses of several provisions of GST are only for general understanding of the readers and should not be relied upon before obtaining appropriate professional advice.

For feedback or queries, author could be reached at [email protected].

Input Credit Scheme Under GST