What does “Aggregate turnover” mean in GST?

AAR of Karnataka gave an important ruling dated May 4, 2020, regarding GST registration in case of Anil Kumar Agrawal [2020] 116 428 (AAR – KARNATAKA) which is discussed as below:

Facts of the Case

The applicant was an unregistered person and in receipt of various types of incomes/revenues such as
- 1) Partner’s salary as partner from his partnership firm,
- 2) Salary as director from private limited company
- 3) Interest income on partners fixed and variable capital accounts,
- 4) Interest received on loan given, advance given, accumulated interest along with deposit/ fixed deposit, interest on debentures, interest on post office deposits; interest on national saving certificates (NSCL interest income on PPF, accumulated interest received on closure of PF account, interest income on national pension scheme (NPS),
- 5) Receipt of maturity proceeds of life insurance policies,
- 6) Dividend on shares,
- 7) Rent on commercial property and residential rent,
- 8) Capital gain/loss on shares.

Issue Involved

Out of the given sources of income/revenue which all revenue income be considered for aggregate turnover for registration under GST?
Out of given nature of income/revenue, when the supply even if exempted need to be considered?

Observation/Ruling

AAR observed that as per the definition of “Aggregate Turnover”, in terms of Section 2(6) of the CGST Act, 2017, “aggregate turnover” means the aggregate value of taxable supplies, exempt supplies, exports of goods or services or both under inter-state supplies of persons having the same permanent account number, to be computed on all India basis . Therefore any income included in aggregate turnover need to be amounts to Supply in terms of Section 7(1)(a) of CGST Act, 2017.
AAR observed that all interest incomes are out of deposits/loan extended by the applicant. The services by way of extending deposits, loan or advances in so far as the consideration is represented by way of interest or discount are exempted under Entry No, 27(i) of the Notification Number. 12/2017 Central Tax (Rate). Thus these are exempted services and are to be included in the aggregate turnover for registration under the provisions of the GST Act.

In respect of Partner’s salary received as partner from partnership firm, AAR stated that if the applicant is working partner and is getting salary then the said salary is neither supply of goods nor supply of service in terms of clause I of Schedule III of the CGST Act 2017. Also if the applicant is in receipt of amount towards his share of profit from the said firm then also the said income is not in purview of GST as the “share of Profit” nothing but application of money and hence not required to be included in the aggregate turnover under the provisions of GST Act.

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AAR observed that when the assessee is nominated as non-executive director of the company and provides the service to the said company. Then the remuneration paid by the company taxable to GST in the hands of company under the reverse charge mechanism. Therefore the value of said service of the applicant being a non-executive director are includable in aggregate turnover as it is the value of the taxable services supplied by the applicant.

AAR observed that the transaction of rental/lease of commercial property amounts to supply and the same is in the course of furtherance of business and hence the said transaction amounts to supply in terms of section 7(1)(a) of CGST Act 2017. Thus the value of such supply included in aggregate turnover for registration.
In respect of Dividend on shares and capital Gain/ Loss on shares AAR observed that The term ‘securities’ which has the same meaning assigned to it in clause 2(h) of securities contract (Regulation) Act 1956. in terms of section 2(101) of CGST Act 2017 explicitly exclude from the purview of GST by virtue of its exclusion from the definition of ‘goods’ and ‘services’ as contained in Section 2(52) and 2(102) of the Act. In instant case dividend on shares, capital gain losses on sale of shares are relevant to securities and income earned is nothing but application of money. Therefore they are not relevant for aggregate turnover and hence not required to be added to aggregate turnover for registration under GST.

In respect of Receipt of Maturity Proceed of Life Insurance Policy, AAR observed that the said income would be received on closure of the insurance contract consequent on maturity of the said policies. The insurance premium is taxable under GST being consideration for services provided by the insurance company. Therefore on completion of the said contract there would not be any service involved between the policy holder and insurance company. Therefore the amount received on maturity of the insurance policy are not relevant and not required to be added in the aggregate turnover for registration under the provisions of GST.

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