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1. With a fresh draft of the GST Model Law released by the GST Council Secretariat in the month of November, 2016, all eyes are now on the Parliament for passage of the GST Laws to make GST a reality!
Goods and Service Tax ('GST') Law, a paradigm shift from the contemporary style of levying Indirect Taxes is expected to bring convenience when it comes to doing business in the world's largest democracy. The controversies relating to levy of Value Added Tax or Service Tax, whether a process amounts to manufacture or not, whether CENVAT Credit or Input Tax Credit will be available or not are expected to be settled to a great extent. Deeming works contract as a supply of service and permitting eligibility of Input Tax Credit on supply of goods or services to be used/ intended to be used, in the course or furtherance of business are snippets of some relief which assessee's can look forward to.
Just a quick and selective rewind. A draft of the Model GST Law was released by the Empowered Committee of State Finance Ministers in the month of June last year. A number of representations were made by trade and industry taking into consideration the provisions of the said draft law. The Constitutional Amendment Bill1 proposing for amendment to the supreme lex (The Constitution of India) was tabled and successfully passed by the Parliament thereby providing a constitutional permissibility for levy of GST in India. Thereafter, the Constitution (One Hundred and First Amendment) Act, 2016, passed by the Parliament received Presidential assent on September 08, 2016.
Keeping the above in mind, let us now analyze some of the provisions dealing with registration under the draft Central/ State GST Act, 2016 issued in November, 2016 'GST Law').
Registration: Chapter VI of the GST Law
2. Chapter VI deals with Registration and extends from Section 23 to Section 27.
Section 23 is titled 'Registration' and contains thirteen sub-sections.
What is the basis for grant of registration?
One of the requirements for obtaining registration is that the person2 who seeks it should hold a Permanent Account Number (PAN) issued under the Income-tax Act, 1961. However, a person who is required under Section 46 to deduct tax shall hold in lieu of PAN, a Tax Deduction and Collection Account Number (TAN) [Section 23(4)].
Further, two categories of persons have been carved out of the above requirement being, (i) Non-resident taxable persons and (ii) special category of persons.
Non-resident taxable persons may be granted registration on the basis of any other document as may be prescribed [Section 23(5)] whereas, special category3 of persons will have to obtain/ will be granted, a Unique Identity Number ('UIN') in the manner prescribed, for the purpose(s) notified, including refund of taxes on the notified supplies of goods and/ or services received by them [Section 23(7)].
Who is to register?
The next question which merits consideration is whether every person is required to get himself registered under the GST Law? The answer may be said to be in the negative.
Section 8 of the GST Law is the charging section and provides for the levy and collection of Central/ State GST. The liability to pay Central GST/ State GST is on every taxable person in accordance with the provisions of the GST Law.
A taxable person is defined under Section 2(98) to have the meaning as assigned under Section 10. Section 10, inter alia, defines taxable person to mean a person who is registered or liable to be registered under Schedule V of the GST Law.
A diagrammatic presentation of Section 23 read with Schedule V may here be considered for better understanding:
Schedule V to the GST Draft Law: Persons liable to be registered
3. This schedule read with the provisions of Section 23, discussed above, enumerates persons who are or are not or are necessarily required to obtain registration under the GST Law. The Paragraphs under the Schedule may be broadly classified as follows:
Section 24 is titled 'Special provisions relating to casual taxable person and non-resident taxable person' and contains three sub-sections. This section provides that the certificate of registration issued to a casual taxable person5 or non-resident taxable persons6 shall be valid for earlier of:
Further, the period of 90 days may be extended by another 90 days. This section also provides that the casual taxable person or the non-resident taxable person shall make an advance deposit of tax for the period for which registration is sought (and the extended period, if applied for) on the date of filing the application for registration. The advance deposit shall be equivalent to the estimated tax liability for the period (applied and extended, where even applicable) and the same shall be credited to the electronic credit ledger for being available for utilization as per Section 44 of the GST Law.
1. The Constitution (122nd Amendment) Bill, 2014
2. Defined inclusively under Section 2(73) of the GST Law to include an individual; a HUF; a Company; a Firm; a LLP; an AOP or BOI, whether incorporated or not, in India or outside India; any corporation established by or under any Central, State or Provincial Act or a Government Company as defined under Section 2(45) of the Companies Act, 2013; any Body corporate incorporated by or under the laws of a country outside India; a cooperative society; a Local Authority; Government; a Society, a Trust, Artificial Juridical person not falling within any of the preceding sub clauses
3. Special categories are:
Article 279A(4)(g) inserted by the Constitution (One hundred and first amendment) Act, 2016 provides that the GST Council shall make recommendations to the Union and the States on special provisions with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Casual Taxable person is defined under Section 2(20) to mean a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.
Non-resident Taxable person is defined under Section 2(68) to mean a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India.