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supply of services or mixed supplies

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Know all Registration Provisions under GST

Know all Registration Provisions under GST

Introduction

Registration of an entity is the initial basic step one has to follow to carry on supply or any other GST compliances. While one may find the registration process unnecessary and complicated, it is followed by a number of advantages, such as legal recognition as supplier of goods/services, availment of ITC, legal authorisation to collect tax from customers etc. Let us learn the varied GST provisions in detail.

Salient features of registration under GST

  1. Registration in GST is PAN based and State specific.
  2. Supplier has to register in each of such State or Union territory from where he supplies.
  3. A person registered in one State is considered ‘unregistered person’ outside the State.
  4. If a person has unit in SEZ or is a SEZ developer and also unit in domestic tariff Area (i.e. outside the SEZ) in the same State, then he has to take separate registration for his SEZ unit.
  5. In GST registration, the supplier is allotted a 15-digit GST identification number called “GSTIN” and a certificate of registration. The first 2 digits of the GSTIN is the State code, next 10 digits are the PAN of the legal entity, the next two digits are for entity code, and the last digit is check sum number.
  6. Registration under GST is not tax specific which means that there is a single registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.
  7. A given PAN based legal entity would have one GSTIN per State, that means a business entity having its branches in multiple States will have to take separate State-wise registration for the branches in different States. But a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business.
  8. Every registered person is required to display his certificate of registration and GSTIN in a prominent location at his principal place of business and at every additional place of business.

Who is not required to obtain registration under GST

Every supplier is required to get registered under GST apart from the following:-

Entities fulfilling the below mentioned criteria are not required to obtain registration mandatorily

a. In case of Exclusive Supply of Goods

Small businesses having aggregate turnover not exceeding Rs 40 Lakh (Rs 20 lakh if business is in the notified special category states)

b. In case of supply of services or mixed supplies

Small businesses having aggregate turnover not exceeding Rs 20 lakhs (Rs 10 lakh business is in the notified special category states)

i. Persons who are engaged exclusively in the business of supplying goods, services or both that are not liable to tax or wholly exempt from tax

ii. An agriculturist to the extent of supply of produce out of cultivation of land

iii. When all the supplies being made by a supplier are taxable under reverse charge i.e. where total tax is payable by the recipient of the goods or services.

What do you mean by aggregate turnover?

  1. Aggregate Turnover is the value of all taxable supplies (excluding inward supplies under RCM), exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number
  2. It excludes Central tax, State tax, Union territory tax, Integrated tax and cess
  3. Aggregate turnover includes supplies made by him on behalf of his principals
  4. The value of job-worked goods is excluded from aggregate turnover if he is a job worker.

Who is required to get registered mandatorily?

The GST law enlists certain categories of suppliers who are required to get compulsory registration irrespective of their turnover.

1.Supplier supplying goods or services outside the State [i.e inter state supplier]

2. Registration for inter state supplier is mandatory. However, this compulsion is relaxed (If the turnover of the below mentioned suppliers is less than specified threshold limit, they will not be required to register), even if they supply such goods outside the State for certain categories of suppliers like:-

a. supplier of handicraft goods

b. supplier of services (except in relation to jewelry, goldsmiths’ and silversmiths’ wares)

c. supplier of job work services. (except in relation to jewelry, goldsmiths’ and silversmiths’ wares)

3. Those paying tax on reverse charge basis.

4. Casual taxable person (casual taxable persons making supplies of specified handicraft goods need not take compulsory registration and are entitled to the threshold exemption limit)

5. Non-resident taxable persons who are not having fixed place of business or residence in India.

6. A person who supplies on behalf of some other taxable person (i.e. an Agent of some Principal).

7. E-commerce operators

8. Authorities notified who are mandated to deduct TDS @ 1% on payment made to supplier (value of supply > Rs. 2.5 lakh)

9. Input service distributor

10. Those supplying online information and data base access or retrieval services from outside India to a non-registered person in India. Instead of State-wise registration, he will take single registration for entire India either himself or through his appointed agent in India, and will pay IGST.

What is the time limit for applying for registration under GST?

  1. An application has to be submitted online through the common portal (GSTN) within 30 days from the date when liability to register arose.
  2. The casual and non-resident taxable persons need to apply at least 5 days prior to the commencement of the business.
  3. For transferee of a business as going concern, the liability to register arises on the date of transfer.

Within how much time will an application of registration be accepted/rejected?

  1. The Proper Officer has to either raise a query or approve the grant of registration within 3 working days failing which registration would be considered as deemed to have been approved.
  2. The applicant would have to respond within 7 working days starting from the 4th day of filing the original application.
  3. The proper officer would have to grant or reject the application for registration within 7 working days thereafter.

Can the registration information be amended?

  1. In case the change in the registration information (change in legal name, State of place of business or additional place of business) the taxable person will apply for amendment within 15 days of the event necessitating the change.
  2. The proper office may approve or reject the amendment within next 15 days, but the proper officer shall not reject the application without giving the person an opportunity of being heard
  3. For other changes like name of day to day functionaries, e-mail Ids, Mobile numbers etc. no approval of the proper officer is required, and the amendment can be affected by the taxable person on his own on the common portal.

Can registration be cancelled?

The GST law provides for two scenarios where cancellation of registration can take place

1.Taxable person no more requires the registration and wants to voluntarily cancel it

2. When the proper officer considers the registration liable for cancellation in view of certain specified defaults:-

i. registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed

ii. a person paying tax under composition scheme has not furnished returns for 3 consecutive tax periods

iii. a person, (other than a person under composition levy), has not furnished returns for a continuous 6 months

iv. any person who has taken voluntary registration under of section 25(3) has not commenced business within 6 months from the date of registration

v. registration has been obtained by means of fraud, wilful misstatement or suppression of facts

Within how much time can a person apply for cancellation suo moto?

The taxable person desirous of cancellation of Registration will apply on the common portal within 30 days of event warranting cancellation.

How will the pending dues be affected in the event of cancellation?

The cancellation of registration shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder.

From what date will a registration considered as suspended?

Where a registered person has applied for cancellation of registration, the registration shall be deemed to be suspended (pending the completion of the proceedings for cancellation of registration) from later of

i. the date of submission of the application

or

ii. the date from which the cancellation is sought

Can order of cancellation of registration be revoked?

  1. When the registration has been cancelled by the Proper Officer on his own motion and not on the basis of an application by the registered person, then the registered person, whose registration has been cancelled, can submit an application for revocation of cancellation of registration.
  2. Application for revocation is to be filed in FORM GST REG-21, to the Proper Officer, within a period of 30 days from the date of order of cancellation of registration.
  3. If the registration has been cancelled for failure to furnish returns, revocation application shall be filed only after such returns are furnished and any amount due, has been paid along with any interest, penalty or late fee.
  4. On examination of the application, if the Proper Officer is satisfied, that there are sufficient grounds for revocation of cancellation of registration, then he shall revoke the cancellation of registration by an order in FORM GST REG-22.
  5. Such order will be passed within a period of 30 days from the date of the receipt of the application.
  6. If on examination of the application for revocation, if the Proper Officer is not satisfied then he will issue a notice in FORM GST REG–23 requiring the applicant to show cause as to why the application submitted for revocation should not be rejected.
  7. Applicant has to furnish the reply within a period of 7 working days from the date of the service of the notice in FORM GST REG-24
  8. Upon receipt of the information or clarification in FORM GST REG-24, the Proper Officer shall dispose of the application within 30 days from the date of the receipt of clarification from the applicant. In case the information or clarification provided is satisfactory, the Proper Officer shall dispose the application as per Point 4 above.
  9. In case it is not satisfactory the applicant will be mandatorily given an opportunity of being heard, after which the Proper Officer after recording the reasons in writing may by an order in FORM GST REG- 05, reject the application for revocation of cancellation of registration and communicate the same to the applicant.

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Standard

Is separate GST registration required if a contractor is providing services in different state?

Is separate GST registration required if a contractor is providing services in different state?

Introduction

Registration of an entity is the initial basic step one has to follow to carry on supply or any other GST compliances. While one may find the registration process unnecessary and complicated, it is followed by a number of advantages, such as legal recognition as supplier of goods/services, availment of ITC, legal authorisation to collect tax from customers etc.

Entities fulfilling the below mentioned criteria are not required to obtain registration mandatorily

1.In case of Exclusive Supply of Goods

Small businesses having aggregate turnover not exceeding Rs 40 Lakh (Rs 20 lakh if business is in the notified special category states)

2. In case of supply of services or mixed supplies

Small businesses having aggregate turnover not exceeding Rs 20 lakhs (Rs 10 lakh business is in the notified special category states)

Registration in GST is PAN based and State specific. Supplier has to register in each of such State or Union territory from where he supplies. A person registered in one State is considered ‘unregistered person’ outside the State.

 If a person is registered in one state and is hired to provide works contract services in another state, will such person be required to be registered in such other case?

Let us refer to the advance ruling of the Karnataka Advance Ruling Authority (AAR) in the case of M/s T & D Electricals (31.03.2020) where the applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan for providing services as a work contractor in Karnataka.

Facts of the Case

  1. The Applicant is registered under the Goods and Services Act, 2017 as works contractor and wholesale supplier in Rajasthan.
  2. They have been awarded a contract by M/s Shree Cement Ltd for electrical, instrumentation and IT jobs (works contract) at a township for Karnataka Cement Project (a unit of Shree Cement Ltd) in the state of Karnataka.
  3. The scope of work of the contract includes complete electrical & instrumentation jobs, installation, testing and commissioning at township. The job involves supply of material and installation, testing and commissioning of the same.
  4. The contractor (applicant) will have to arrange all required tools, materials and manpower/electrician/technician as per the contract.
  5. The invoices have to be addressed to Karnataka Cement Project and the GSTIN of the Shree Cement Ltd (Karnataka) is required to be mentioned in the invoices.
  6. The contractor (applicant) does not have any premises in Karnataka. M/s Shree Cement Ltd will only provide temporary small space for office & store in their premises without any written documents.

In view of this, the applicant filed the instant application, as an unregistered person, seeking advance ruling in respect of the following questions:-

  1. Whether separate registration is required in Karnataka state? If yes, whether agreement would suffice as address proof since nothing else is with the applicant and service recipient will not provide any other proof?
  2. If registration is not required in Karnataka and if goods are purchased from Rajasthan and shipped directly to the township at Karnataka then whether the dealer in Rajasthan has to charge CGST & SGST or the IGST?
  3. If registration is not required in Karnataka and if goods are purchased from Karnataka to use the goods at the township in Karnataka then whether the dealer in Karnataka has to charge CGST & SGST or IGST?
  4. What documents would be required with transporter to transit/ship material at Karnataka site from dealer/supplier of Rajasthan and in case of dealer/supplier is of Karnataka.

Submissions by the Applicant:-

  1. Section 22 of the CGST Act 2017 provides requirement for registration according to which every supplier shall be liable to be registered under this Act in the state or union territory, other than special category of states, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs 20 lakhs.
  2. Section 2(71) defines location of supplier and in the instant case location of supplier (applicant) is Rajasthan, as the supply is made from Rajasthan.
  3. Further Section 2(71) also defines location of supplier of services’ and in the instant case the location of the applicant (works contractor) will be the state where his principal place of business is registered (unless he has established office/establishment in the place where the services are supplied)
  4. The place of supply, in case of works contract services, shall be the location at which the immovable property (construction site) is located, as per Section 12(3)(a) of IGST Act 2017.
  5. Therefore according to the applicant, they are not required to have any separate GST registration in Karnataka State.
  6. Section 10(1) of the IGST Act 2017 determines the place of supply of goods, other than supply of goods imported into, or exported from India, which has two clauses i.e. (a) and (b). We understand that clause (b) is applicable to the instant case and hence CGST & SGST should be charged in case when registration is not required and goods are purchased from Rajasthan and shipped directly from dealer of Rajasthan to township at Karnataka. Further if the goods are purchased from a dealer of Karnataka and shipped to the site of Karnataka, then IGST should be charged in terms of Section 10(1)(b) of the IGST Act 2017.

Observations by the AAR

  1. The applicant herein has got the contract form M/s Shree Cement Ltd., Rajasthan for execution of the same at the location situated in Kalaburagi district of Karnataka State.
  2. The applicant is a registered person in Rajasthan and with this background has sought advance ruling in respect of the questions mentioned at para 2 supra. We take up each question at a time for discussion.

Is separate registration is required to execute the contract in Karnataka State or not?

  1. Section 22 of the CGST Act 2017 is relevant to registration and stipulates that every supplier shall be liable to be registered in the state from where the said supplier makes the taxable supply of goods or services or both, subject to the threshold limit of the aggregate turnover in a financial year.
  2. In the instant case, the applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan.
  3. The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business, as admitted by the applicant.
  4. Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan.
  5. Thus there is no requirement for a separate registration in Karnataka for execution of the contract.

If registration is not required in Karnataka and if goods are purchased from Rajasthan and shipped directly to the township at Karnataka then whether the dealer in Rajasthan has to charge CGST & SGST or the IGST?

  1. In this situation the supplier i.e. dealer in Rajasthan and the recipient of goods i.e. the applicant, both are situated in the same state of Rajasthan and hence the impugned supply becomes intra-state supply, in terms of Section 8 of the IGST Act 2017.
  2. The said supply gets covered under Bill to – Ship to transaction, in terms of Section 10(1)(b) of IGST Act 2017.
  3. Under “Bill To Ship To” model of supply, there are three persons involved in a transaction (‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’)
  4. According to section 10 (1)(b) of the IGST Act, where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.
  5. Thus CGST & SGST has to be charged by the dealer in the relevant invoice. However, the applicant has to charge IGST in their invoice addressed to M/s Karnataka Cement Project.

If registration is not required in Karnataka and if goods are purchased from Karnataka to use the goods at the township in Karnataka then whether the dealer in Karnataka has to charge CGST & SGST or IGST?

  1. In this situation the supplier i.e. dealer is situated in Karnataka & the recipient of goods i.e. the applicant, is situated in the state of Rajasthan and hence the impugned supply becomes inter-state supply, in terms of Section 7(1) of the IGST Act 2017.
  2. Further the said supply gets covered under Bill to – Ship to transaction, in terms of Section 10(1)(b) of the IGST Act 2017.
  3. Thus IGST has to be charged by the dealer in the relevant invoice. However, the applicant also has to charge IGST in their invoice addressed to M/s Karnataka Cement Project (a unit of Shree Cement Ltd.).

Thus it can be concluded that,

It is not required to obtain a separate registration in a separate state, to execute the project in that state, when they are registered in another. However, one is at liberty to obtain the said registration, if they are able & intend to have a fixed establishment at the project site in of the different state.

The dealer from a one state has to charge CGST & SGST when the goods, purchased by the applicant who is registered in the same state as the dealer but are shipped to project site in a different state, under “bill to ship to” transaction in terms of Section 10(1)(b) of the IGST Act 2017.

The dealer in state where the project is taking place has to charge IGST when the goods, purchased by the applicant, are shipped to project site, under bill to ship to transaction in terms of Section 10(1)(b) of the IGST Act 2017.

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