UNIT II
REGISTRATION UNDER GST
1. Every supplier liable to be registered if aggregate turnover in financial year exceeds Rs.40 lakhs / 20 lakhs in Special Category States [SEC 22(1)]:
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 goods and services both, if his aggregate turnover in a financial year exceeds Rs. 40 lakhs.
Where such person’s 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 Rs. 20 lakhs.
Meaning of Aggregate turnover [SEC 2(6)]: “Aggregate turnover” means the aggregate value of:
of persons having the same PAN number, to be computed on all India basis, but excludes :
a) Central tax
b) State tax
c) Union territory tax
d) Integrated tax and
e) Cess.
2. Every supplier liable for registration will have to take a separate registration in every state even though such supplier may be supplying goods or services or both from more than one state as a single entity.
3. Registrants under existing law required to obtain registration under GST [SEC 22(2)]:
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.
Appointed day [sec 2(10)]
“Appointed day” means the date on which the provision of this act shall come into force i.e. 1.7.2017.
4. Transfer of Business – Transferee to obtain fresh registration [sec 22(3)]:
Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
5. Transfer pursuant to scheme for amalgamation/demerger – transferee liable to be registered from date of incorporation [sec 22(4)]:
Notwithstanding anything contained in sub-section (1)&(3), in a case of transfer pursuant to sanction of a sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, 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 such order of the high court or tribunal.
6. Supply of goods by Job- worker to be included in supplies of principal
The supply of goods, after completion of Job-worker by a registered job-worker shall be treated as the supply of goods by the principal referred to in sec 143 and the value of such goods shall not be included in the aggregate turnover of the registered job-worker.
7. Special category States
“Special category States” shall mean the states as specified in article 279 A (4)(g) of the Constitution. They are states which opted for new limit of Rs.20lakhs for sale of goods.
Compulsory registration in certain cases [sec 24] : Notwithstanding anything contained in section 22(1), the following categories of persons shall be required to be registered under this Act –
Procedure for registration is governed by section 25 of the CGST Act read with relevant CGST Rules, 2017. Relevant provisions of CGST Rules, 2017 have been incorporated at the relevant places. Further, special provisions have been provided for registration of casual taxable person and non-resident taxable person under section 27. Concept of deemed registration has been elaborated under section 26.
Under GST, the application for registration has to be submitted electronically at the GST Common Portal –www.gst.gov.in, duly signed or verified through Electronic Verification Code (EVC)
Around 30 forms/formats have been prescribed in the CGST Rules, 2017. For every process in the registration chain such as application for registration, acknowledgment, query, rejection, registration certificate, show cause notice for cancellation, reply, cancellation, amendment, field visit report etc., there are standard formats10. This makes the process uniform all over the country. The decision-making process has also been expedited. Strict time lines have been stipulated for completion of different stages of registration process.
PARTICULARS | WHERE | WHEN |
Person who is liable to be registered under section 22 or section 24 | in every such State/UT in which he is so liable | within 30 days from the date on which he becomes liable to registration |
A casual taxable person or a non-resident taxable person | at least 5 days prior to commencement of business |
2. State-wise registration [Section 25(2) read with rule11]
- Registration needs to be taken State-wise, i.e. there are no centralized registrations under GST. A business entity having its branches in multiple States will have to take separate State-wise registration for the branches in different States.
- Further, within a State, an entity with different branches shall be granted single registration wherein it can declare one place as principal place of business (PPoB) and other branches as additional place of business(APoB).
b. Separate registration for different places of business within a State/UT may be granted
c. Composition levy in case of separate registration for multiple places of business within a state/UT
3. Voluntary registration [Section25(3)]
A person who is not liable to be registered under section 22 or section 24 may get himself registered voluntarily. In case of voluntary registration, all provisions of this Act, as are applicable to a registered person, shall apply to voluntarily registered person. However, once a person obtains voluntary registration, he has to pay tax even though his aggregate turnover does not exceed 20 lakhs/10 lakhs.
Voluntary registration is usually obtained by the business for ensuring seamless flow of credit to their customers.
4. Distinct Persons/ establishments of distinct persons [Section 25(4) & (5)]
A person who has obtained/ is required to obtain more than one registration, whether in one State/ Union territory or more than one State/Union territory shall, in respect of each such registration, be treated as distinct persons.
Further, where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons.
5. PAN must for obtaining registration [Section 25(6) &(7)]
Permanent Account Number is mandatory to be eligible for grant of registration.
6. Unique Identity Number(UIN)[Section25(9)&(10)readwithrule17]
Any specialized agency of the United Nations Organization or any Multilateral Financial institution and organization as notified under the United Nations (Privileges and Immunities)
Act,1947,consulate or embassy of foreign countries and another person notified by the Commissioner, is required to obtain a UIN from the GSTN portal.
This UIN is needed for claiming refund of taxes paid on notified supplies of goods and/or services received by them, and for such other purpose as may be notified. UIN granted is a centralized UIN i.e. it shall be applicable to the territory of India. A person having UIN is not registered person and thus, is not a taxable person.
The proper officer may, upon submission of an application in prescribed form or after filling up the said form or after receiving a recommendation from the Ministry of External Affairs, Government of India, assign a UIN to the said person and issue registration certificate within 3 working days from the date of submission of application.
7. Suo-motu registration by the proper officer [Section 25(8) read with rule16]
Where, pursuant to any survey, enquiry, inspection, search or any other proceedings under the Act, the proper officer finds that a person liable to registration under the Act** has failed to apply for such registration, such officer may register the said person on a temporary basis and issue an order in prescribed form.
**Such person shall either:
In case (ii), if the Appellate Authority upholds the liability to registration, application for registration shall be submitted within 30 days from the date of issuance of such order of the Appellate Tribunal.
Provisions relating to verification and issue of registration certificate [as contained in rules 9 and 10] [discussed in subsequent paras] shall, mutatis mutandis, apply to such application submitted by the person granted temporary registration. GSTIN thereafter granted shall be effective from the date of order of proper officer granting temporary registration.
8. Procedure for registration [Section 25 read with rules 8, 9 &10]
Provisions relating to procedure for application for registration, verification of the application and approval &issue of registration certificate are contained in the rules 8, 9 and 10 of the CGST Rules, 2017 respectively. The same have to be read in conjunction with section 25 provisions. However, procedure so laid down will not apply to:
Thus, procedure for registration prescribed under rules 8, 9 and 10 are also applicable to a person paying tax under composition levy, every person seeking voluntary registration as well as a casual taxable person.
Such persons shall apply for registration in Form GST REG 01. The application for registration in GST Form REG 01 is divided into two parts – Part A and Part B.
In order to cater to the needs of tax payers who are not IT savvy, Facilitation centres have been established which help the taxpayer in submitting the application for registration, amending the registration certificate, submitting application for cancellation of registration, revocation of cancellation of registration, etc. Facilitation Centre shall be responsible for the digitization and/or uploading of the forms and documents.
Application for registration by Special Economic Zone (SEZ) [Second proviso to section 25(1):A person having unit in SEZ/an SEZ developer will have to make a separate application for registration as distinct from his place of business located outside SEZ in the same State/UT. Thus,there may be a case where two units of a tax payer are located in same State/UT - one in SEZ and another outside SEZ. In that case, separate registrations have to be obtained for each of the two units as separate places of business.
9. Effective date of registration [Rule10]
Where an applicant submits application for registration | effective date of registrations |
within 30 days from the date he becomes liable to registration | the date on which he becomes liable to registration |
after 30 days from the date he becomes liable to registration | date of grant of registration |
Documents required for Sole Proprietorship / Individual
Documents required for Partnership deed/LLP Agreement
Documents of Partners:-
Additional documents in case of LLP–
Documents required for Private Limited / Public Limited / One Person Company (Indian or Foreign)
Documents required for HUF
Documents required for Society or Trust or Club
Reverse charge mechanism is typically, the taxable person supplying goods and services is liable to pay GST. But, there are certain cases such as imports and other types of supplies where the recipient of goods and services is liable to pay GST instead of the supplier. In other words, the liability to pay GST shifts from the supplier to the recipient of goods and services. Further, the recipient must be a registered person as per section 2(94) of the CGST Act, 2017.
According to section 2(94) of the CGST Act, a registered person means a person who is registered under section 25 of the Act. This does not include the person having a unique identity number.
What is Reverse Charge Mechanism Under GST?
Reverse charge means the liability to pay GST is on the recipient instead of the supplier of goods and services. This is unlike the usual regulation under GST where the supplier of goods and services is obligated to pay GST for the supplies made.
Further, this means all the provisions of the Act would be applicable to such a recipient as if he is the person responsible for paying the tax with regards to supply of goods or services. In other words, in case the recipient is unable to pay the tax under reverse charge mechanism, the supplier holds no liability to pay such a tax.
Compulsory Registration For Persons Subject To Reverse Charge
There are certain categories of persons required to register under GST compulsorily. Section 24 of the CGST Act, 2017 provides the list of such category of persons. As per this list, persons required to pay tax under reverse charge are also required to compulsorily register under GST.
In other words, the threshold limit for GST registration of Rs 40 Lakhs in case of goods and Rs 20 Lakhs in case of services shall not apply to such persons.
Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore*
Who can opt for Composition Scheme?
A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. In case of Sikkim, Arunachal Pradesh, Manipur, Mizoram, Meghalaya, Assam, Nagaland, Tripura, Uttarakhand and Himachal Pradesh, the limit is now Rs 75 lakh.
As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher.
Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.
Who cannot opt for Composition Scheme?
The following people cannot opt for the scheme-
What are the conditions for availing Composition Scheme?
The following conditions must be satisfied in order to opt for composition scheme:
How can a taxpayer opt for composition scheme?
To opt for composition scheme a taxpayer has to file GST CMP-02 with the government. This can be done online by logging into the GST Portal.
This intimation should be given at the beginning of every Financial Year by a dealer wanting to opt for Composition Scheme.
How Should a Composition Dealer raise bill?
A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot charge tax from their customers. They need to pay tax out of their own pocket.
Hence, the dealer has to issue a Bill of Supply.
The dealer should also mention “composition taxable person, not eligible to collect tax on supplies” at the top of the Bill of Supply.
What are the GST rates for a composition dealer?
Following chart explains the rate of tax on turnover applicable for composition dealers :
TYPE OF BUSINESS | CGST | SGST | TOTAL |
Manufacturers & Traders(GOODS) | 0.5% | 0.5% | 1% |
Restaurants not serving alcohol | 2.5% | 2.5% | 5% |
Other Service Providers | 3% | 3% | 6% |
Value of Supply in case of Composition Scheme
In case of Manufacturer Composition levy (i.e.: 1%) will be applicable on Total Turnover
In case of Traders Composition levy (i.e.: 1%) will be applicable on Taxable Turnover.
How should GST payment be made by a composition dealer?
GST Payment has to be made out of pocket for the supplies made.
The GST payment to be made by a composition dealer comprises of the following:
What are the returns to be filed by a composition dealer?
A dealer is required to file a quarterly return GSTR-4 by 18th of the month after the end of the quarter. Also, an annual return GSTR-9A has to be filed by 31st December of next financial year. Also, note that a dealer registered under composition scheme is not required to maintain detailed records.
What are the advantages of Composition Scheme?
The following are the advantages of registering under composition scheme:
What are the disadvantages of Composition Scheme?
The disadvantages of registering under GST composition scheme are:
Export supplies of a taxpayer registered under GST are classified as zero-rated supply under GST. Zero-rated supply under GST is eligible for a refund. Taxpayers shall furnish details of all zero-rated supply in GSTR 3B return and GSTR 1 return.
What is Zero Rated Supply?
GST is not applicable in India for exports. Hence, all export supplies of a taxpayer registered under GST would be classified as a zero-rated supply. According to Section 16 of the IGST Act, zero-rated supply means any of the following supplies of goods or services:
GST Refund for Zero Rated Supply
As per GST rules, the supplier can claim the input tax credit in respect of goods or services used for the supplies as exports act as zero-rated supply, even though termed as non-taxable or even exempt supplies.
To claim GST refund for exports, the taxpayer can export under bond or LUT and claim refund or export on payment of IGST and claim a refund.
1. The operation of the taxing statute needs flexibility along with certain power for the smooth implementation of the provisions. Sec 11 of CGST Act 2017 provides the power and flexibility to the Government to grant exemptions on the recommendation of GST Council.
2. Sec 11(1) of CGST Act – Statutory Provision :
Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification. – Sec 11(1) of CGST Act 2017
2.1 Explanation:– The relevant points under sec 11 (1) of CGST Act 2017 about Government’s power to grant exemptions are as follows:-
(a) Central/State Government has the power to reduce GST rates by issuing exemption notification.
(b) The exemption should be in the public interest.
(c) The exemption notification can be issued only based on the recommendation of GST Council.
(d) The exemption can either be absolute (unconditional) or subject to conditions.
(e) The exemption can be in respect of goods or services or both of any specified description.
(f) The exemption can be from the whole or any part of the tax leviable thereon.
(g) The exemption notification becomes effective on the date as specified in the notification issued by the Central/State Government.
3. Sec 11(2) of CGST Act – Statutory Provision :
Where the Government is satisfied that it is necessary in the public interest to do so , it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax on any goods or services or both on which tax is leviable
3.1 Power to grant Exemption by Special Order:-
(a) The Central Government has the power to grant the exemption, in the public interest, in exceptional circumstances by special order.
(b) Such exemption can be only on the recommendation of GST Council.
(c ) It is not necessary to publish the order in Official Gazette.
(d) This is an ad hoc exemption and can be granted even retrospectively.
(e) A special exemption can be granted to a specific category of person/sector. The Government has power granting exemption to public sector undertakings giving reasons for such exemption, but not giving similar exemption to private persons It was held in Jain Exports P Ltd. v. UOI that such permission by the Government is permissible and will not be treated as discriminatory.
4. Sec 11(3) of CGST Act – Statutory Provision :
The Government may if it considers necessary or expedient so to do to clarify the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.
4.1 Insertion of clarification to Exemption notification: Exemption notification issued by the Government may have some drafting mistake or ambiguity which creates confusion in taxpayers minds. As a result taxable person gets unintended benefit while in some cases even intended benefit cannot be obtained.
To overcome this problem, section 11(3) of CGST Act provides that Central Government, in order to clarify the scope or applicability of exemption notification or exemption order, may insert an explanation to the exemption notification or order within one year of such notification or order.
The time limit for inserting the explanation in exemption notification is only one year of the date of issue of notification and not thereafter.
Explanation of an exemption Notification will have a retrospective effect from the date of the exemption notification.
The retrospective insertion can be made only to explain or clarify as the purpose of ‘explanation’ is to clarify the scope or applicability of an exemption notification or exemption order.
The clarification to exemption notification/order cannot be added with retrospective effect to restrict the scope of notification/order or to insert a condition that was not there.
5. Explanation to Sec 11(3) of CGST Act – Statutory Provision :
Explanation.––For this section, where an exemption in respect of any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, over the effective rate, on such supply of goods or services or both.
5.1 The Government vide notifications grant absolute ( unconditional ) or conditional exemption. If a notification grants unconditional exemption from GST and specifies the rate of goods and /or services as the NIL rate, the taxable person cannot collect and pay tax on such a supply of goods and/ or services.
6. Difference between Notifications under Section 11 & Sec 9 of CGST Act 2017
Notifications under section 11 of CGST Act 2017 issued for supply of any goods or /and services which attracts nil rate of tax or which may be wholly exempt and includes Non- Taxable supply also, whilst section 9 is a charging section which Act notifies rates of goods and services
Notification No. 02/2017- Central Tax (Rate) for goods and Notification No. 12/2017- Central Tax (Rate) for services have been issued by using power given under section 11 of CGST ACT. So goods and services mentioned in these two notifications are exempted goods as per the definition of exempt supply.
Section 9 of the CGST Act notifies rates of goods and services vide Notification No. 01/2017- Central Tax (Rate) which contains six schedules specifying tax rates at 2.5%, 6%, 9%, 14%, 1.5%, and 0.125%. There is no schedule levying tax at 0% i.e. NIL rated.
In the case of services, there is only one service that is notified as Nil rated in Notification No. 11/2017- Central Tax (Rate) at S.No. 24 i.e Support services to agriculture, forestry, fishing and animal husbandry.
GST Rate Schedule for Goods and Services
Slab Rates | Popular Goods | Popular Services |
5% | Frozen vegetables, Fertilizers, Spices, Plastic waste | Newspaper printing, Takeaway Food, Restaurants |
12% | Ghee, Nuts, Fruits, Pouches, purses and Handbags | Temporary basis IP rights, Building construction for sale |
18% | Washing Machine, Camera, Shampoo | Outdoor Catering, IT services, Telecom services |
28% | Sunscreen, Motorcycles, Pan Masala | Cinema, Food/Drinks/Stay at AC Five Star Hotels |
In India, there are 4 types of GST rates:
GST Slab of 5%
Under this slab, the goods of basic amenities are covered such as sugar, oil, spices, coffee, coal, fertilizers, tea, ayurvedic medicines, agarbatti, sliced dry mango, cashew nuts, sweets, handmade carpets, lifeboats, fish fillet, unbranded namkeen, and life-saving drugs are covered.
The services under this slab include railways, airways, takeaway food, AC and Non-AC restaurants, hotel rooms with a tariff less than Rs. 7,500, and special flights for pilgrims.
GST Slab of 12%
Under this slab, products like cell phones, sewing machine, umbrella, jewelry box, along with processed foods like frozen meat, fruit juices, butter, cheese, ghee are covered.
The services under this slab include business class flight tickets and movie tickets below Rs. 100.
GST Slab of 18%
Under this slab products like hair oil, safety glass, pasta, pastries, ice-cream, mineral water, hair shampoo, oil powder, water heaters, washing machine, detergent, scent sprays, leather clothing, cookers, oil powder, cutlery, binoculars, artificial flowers, wristwatches, suitcase, briefcase, shaving, after-shave, furniture, stationery items, mattress monitors, television screen, lithium-ion batteries, video games are covered.
The services under this slab include restaurants within hotels whose tariffs are above Rs. 7,500, actual hotel bill below Rs. 7,500, movie tickets above Rs. 100.
GST Slab of 28%
Under this slab, over 200 products are covered like cars, cigarettes, durable consumer products, high-end motorcycles, pan masala, weighing machine, cement are covered.
The services under this slab include racing, betting in casinos, the actual bill of hotel stay above Rs. 7,500.
A special rate of 0.25% is levied on semi-polished and cut stones.
References:
