Critical analysis of provision for registration under GST Model Law

Section 9 of CGST/SGST Act speaks about the registration. (Although it belongs to taxable person). It reads as “Taxable Person means a person who carries on any business at any place in India /State of ____ and who is registered or required to be registered under Schedule III of this Act” (Emphasis supplied) We have not provided the full text of section here. Only the portion talks about the liability of registration under schedule III is mentioned here.
Now let us have a look on schedule III “Liability to be register”

1. Every supplier shall be liable to registered under this Act

– in the state from where he makes a taxable supply of Goods and /or services

– if his Aggregate turnover 

– in a financial year  exceeds Rs. nine lac

1. 1. Every supplier shall be liable to registered under this Act

– in the state from where he makes a taxable supply of Goods and /or services

– if his Aggregate turnover 

– in a financial year  exceeds Rs. Four lac 

Above Limit of Rs. four lac is for North eastern states including Sikkim.

Aggregate turnover is defined u/s 2(6) of CGST/SGST Act.

““aggregate turnover” means the 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 CGST Act, SGST Act and the IGST Act, as the case may be;
Explanation.- Aggregate turnover does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies.”

Analysis: a)  Here a taxpayer need to get register only when he has a taxable supply form a state. If your aggregate turnover exceeds the threshold limit but the supply from a state is not a taxable supply then he don’t need to take registration in that state.

b) If our aggregate turnover crosses the threshold limit we need to take registration in every state from where we are making taxable supplies.

c) If we are operating in any north east area and Aggregate turnover cross Rs. four lac then we need to register in each state we are making taxable supply. As this threshold is to see when the liability to get registration arises. Once it is crossed we will have to register in every state from where we are making taxable supply.

d) Definition of taxable person excludes a person making only exempted supply. In case a taxpayer is engaged in both taxable and exempted supply his aggregate turnover will include the exempted supply also. But is a taxpayer is making only exempted supply he shall not  be liable to GST.

1. Explanation 1 & 2:

2.Subject to the provisions of paragraph 1, every person who, on the day
immediately preceding the appointed day, is registered or holds a license under an
earlier law, shall be liable to be registered under this Act with effect from the appointed
day.

3. Transfer of business:

-by a taxable person registered under this Act

-On account or succession or otherwise

-As a going concern

-Transferee/successor shall be liable to be registered

-from the date of such transfer or succession

4. In case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or de-merger of two or more companies by an order of a 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 such order of the High Court.

Provision of this part are override the provision of para 1 and 2 as it read as ” Notwithstanding anything contained in paragraph 1 and 2 above, in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered, where required, 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.

Here the liability to get registered will arise even if the “aggregate turnover” by transferee don’t exceed the  threshold limit given under para 1 and 2.

5.Liability to take registration without any threshold limit: Following categories are required to take registration under GST even if the threshold limit given in para 1 and 2 don’t exceeds:
i) Person making Inter state taxable supply.

ii) Casual Taxable person

iii) Persons who are required to pay tax under reverse charge.

iv) Non- Resident Taxable person. (Not all non resident, only the non residents covered by definition of “taxable person”)

v) Person who is required to deduct tax under section 37. (TDS

vi) Persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise

vii) An input service distributor

viii) persons who supply goods and/or services, other than branded services, through electronic commerce operator. This provision will cover all sellers who are selling their goods or services (except branded services) on E- commerce portals like Flipkart, snapdeal, Jabong. If you are selling via any e- commerce portal you need to take registration without any threshold limit.

ix) every electronic commerce operator covering every e commerce portal like Flipkart, Amazon. If you are planning to start an e-commerce portal you need to get registered first before start selling any Goods/services.

x) an aggregator who supplies services under his brand name or his trade name. This portion covers aggregators who use services or others but provide it under their brand name like Uber, ola.

xi) Such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.

Related Topic:
Critical Changes in GST Compliances from 1st January 2021

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