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Registration under Revised GST Law!

January 7, 2017[2017] 77 taxmann.com 85 (Article)

Nikhil Mediratta

Associate, Lakshmikumaran & Sridharan

Introduction

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:

image

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:

(i)   Person with availability of threshold (Paragraph 1) : This may be called as the general category wherein a person will be required to obtain registration in the State only if the aggregate turnover of taxable supplies, of goods and/ or services, in a financial year exceeds the threshold. The threshold has however been differentiated qua the category of states. The taxable turnover for States covered under the newly inserted Article 279A(4)(g)4 of the Constitution of India and for the Special Category States has been fixed at INR 10 lacs. In all other cases, the threshold is INR 20 lacs.
(ii)   Persons not liable to registration (Paragraph 2): This category covers persons exclusively engaged in supplies which are either not liable to tax or are wholly exempt under the GST Law. It also covers an agriculturist for the purpose of agriculture.
(iii)   Persons registered under the existing law (Paragraph 3): This paragraph provides that a person who is registered or holds a license under the earlier law shall be liable to registration on the appointed day. However, the thresholds available under paragraph 1 (10 lacs/ 20 lacs) will be available.
  For instance, assuming that the appointed day is April 01, 2017, if a service provider was registered under the Finance Act, 1994 as on March 31, 2017, he shall be liable to registration on April 01, 2017. However, if his aggregate turnover, say, in Other States (not Article 279A(4)(g)/ Special Category States), has not exceeded INR 20 lacs, he shall not be covered under Item 3 and accordingly, not liable to obtain registration. Though, he may seek registration voluntarily.
(iv)   Registration on account of transfer of business (Paragraph 4 & 5): Paragraph 4 requires the where the business of a registered taxable person is transferred to another as a going concern, whether on account of succession or otherwise, the transferee or the successor, as the case may be, shall be liable to be registered.
  Paragraph 5 provides that in the case of a transfer pursuant to a sanction of a scheme or an arrangement for Amalgamation or Demerger of two or more companies by an order of the High Court, the transferee shall be liable to be registered with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to the order of the High Court.
(v)   Registration without any threshold (Paragraph 6): This is the last paragraph and provides for registration without availability of any threshold. The persons covered are:
a.   Persons making any inter-state taxable supply;
b.   Casual Taxable persons;
c.   Persons who are required to pay tax on reverse charge;
d.   Persons required to pay tax under Section 8(4) (E Commerce operators) on specified category of services;
e.   Non-resident taxable persons;
f.   Persons who are required to deduct tax under Section 46;
g.   Persons who are required to collect tax under Section 56;
h.   Persons who supply goods and/ or services on behalf of other taxable person as an agent or otherwise;
i.   Input Service Distributor, whether or not separately registered;
j.   Persons who supply goods and/ or services [except supplies covered by Section 8(4)] through an E commerce operator who is required to collect tax under Section 56;
k.   Every E Commerce Operator;
l.   Every person supplying Online Information and database access or retrieval service from a place outside India to a person in India, other than a registered taxable person; and
m.   Such other person or class of persons as may be notified by the Central/ State Government on recommendation of the Council.

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:

  The period specified in the application for registration, or
  90 days from effective date of registration.

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.

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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:

(i)   Any specialized agency of United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries; and
(ii)   Any other person or class of persons as may be notified by the Commissioner.

4. 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.

5. 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.

6. 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.

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