COMPULSORY REGISTRATION UNDER GST

1. Introduction

GST Act stipulates that any supplier of goods, services or both must register as a GST Act if their aggregate turnover of more than Rs. 20 lakhs in a year (Rs.10 lakhs in Special Category States) have to obtain GST registration. If the supplier is only supplying goods, then threshold limit is Rs. 40 lakhs in a year (Rs.20 lakhs in Special Category States) subject to the condition that State has opted for this higher threshold limit. However, As per the section 24 of CGST Act 2017 , certain categories of persons shall be compulsorily required to be registered under GST, even if their aggregate turnover is below specified exemption limit and are exempted from GST registration under section 22(1) – section 24(1) of CGST and SGST Act.

2. Registration (Section 22)

When GST is applicable, the supplier registration decision would be made. In order to maintain competitiveness and ensure input credit setoff availability, intermediate goods suppliers should not be exempted. A supplier, whether an importer, distributor, or retailer, who wants to pass on the GST payment on goods imported/traded by him to customers would need to register under the GST laws. They must keep proper records and account books and issue invoices for the supply and sale of goods and services.

3. COMPULSORY GST REGISTRATION:

Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act irrespective of the aggregate turnover, –

1. Persons making any inter-State taxable supply:-

A persons making any inter-State taxable supply of goods is required to be registered under GST irrespective of turnover limit

Exemption from compulsory GST registration even making interstate supply :-

(a) A person making inter-state supply of services is not required to register under GST if his aggregate turnover is less than Rs 20/10 lakhs. Notification No. 10/2017-IT dated 13-10-17)

(b) Persons engaged in supply of handicraft goods making inter-state supply are exempt from GST registration, if the aggregate value of all their supplies on all India bases is less than Rs 20 lakhs/10 lakhs per annum.

(c) A job worker with turnover less than 20/10 lakhs is exempt from registration, even if he makes inter-State supplies to registered person. This exemption is not available to Jewellery, goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis – (Notification No. 7/2017-IT dated 14-9-2017 as amended on 29-1-2019).

2. Casual taxable persons making taxable supply

As per section 24 of CGST Act 2017, a casual taxable person is required to obtain compulsory registration irrespective of the aggregate turnover in the previous year. However exemption has been given to person engaged in the supply of “Handicraft goods”. A casual taxable person making taxable supplies of handicraft goods is exempted from obtaining registration if aggregate turnover to be computed on all India basis not exceeding an amount of 20 Lakhs.

Casual taxable person meaning– As per sec 2(20) of CGST Act means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business

For example, Mr. R, a tax consultant, having a place of business in Noida. He is providing tax consultancy in Mumbai where he does not have a fixed place of business. In the given case, as per section 24, Mr. R has to take compulsory registration in Mumbai before providing such services.

3. Persons who are required to pay tax under reverse charge

A person who is required to pay tax under reverse charge has to take compulsory registration as he has to take registration to submit tax under reverse charge.

The important point should be taken into consideration that Section 24 overrides sec 22 only so any person who is exclusively in the business under section 23 i.e. any person engaged exclusively in the business of supplying goods or services not liable to tax or wholly exempt from tax then he is not required to get himself registered.

A Person engaged exclusively in manufacture of exempted product receiving GTA service which is under reverse charge would require registration under CGST Act in order to discharge his duty liability under reverse charge. (Jalaram Feeds, In re [2019] (AAR – MAHARASHTRA)

In case of mandatory RCM, the service recipient is compulsorily liable to pay tax and all the provision of GST law shall apply to such recipient as if he is the person liable for paying the tax. On account of this, the provisions of section 24 are introduced for mandatory registration in such cases.

The important point should be taken into consideration that Section 24 overrides sec 22 only so any person who is exclusively in the business under section 23 i.e. any person engaged exclusively in the business of supplying goods or services not liable to tax or wholly exempt from tax then he is not required to get himself registered.

A Person engaged exclusively in manufacture of exempted product receiving GTA service which is under reverse charge would require registration under CGST Act in order to discharge his duty liability under reverse charge. (Jalaram Feeds,In re [2019] (AAR – MAHARASHTRA)

In case of mandatory RCM, the service recipient is compulsorily liable to pay tax and all the provision of GST law shall apply to such recipient as if he is the person liable for paying the tax. On account of this, the provisions of section 24 are introduced for mandatory registration in such cases.

4. Electronic Commerce Operator

Electronic Commerce Operator who is required to collect tax at source under section 52;] [The words ‘required to collect ‘inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019]. Thus, an e commerce operator would require registration only when he is required to collect tax at source under section 52 of CGST Act.

“Electronic commerce” and Electronic operator” is defined under section 2(44) and 2(45) of CGST act.

As per section 2(44) of the CGST Act, “Electronic commerce means the supply of goods or services or both, including digital products over a digital or electronic network”

As per section 2(45) of CGST Act, “Electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce”

It is mandatory to take GST registration for an e-commerce operator if he is required to collect tax at source under section 52. Moreover, any person, who engaged in the supply of goods or services through such an e-commerce operator, also required to obtain compulsory registration under GST.

Exception:

However, Supplies through e-commerce operator in the following cases shall not be covered under compulsory registration criteria

Supplies notified under section 9(5) of CGST Act.

Any person who provides services and the aggregate value of such services does not exceed the threshold limit Rs 20 lakhs per annum (Rs 10 lakhs in case of specified States).- Notification No. 65/2017-CT dated 15-11-2017.

5. Non-resident taxable persons making taxable supply

A non-resident person who is making any kind of taxable supply in the taxable territory then he has to take compulsory registration.

As per section 2(77) of CGST Act 2017,”Non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India;

6. Persons who are required to deduct tax under section 51, whether or not separately registered under this Act

Following persons are required to deduct tax under section 51 of CGST act-

Local authority

A department or an establishment of the Central Government or State government

Government Agencies

Such persons or categories of persons may be notified by the government. Are required to get itself registered under GST compulsorily

7. Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise

A person who is working as an agent or otherwise and also making taxable supply then as per section 24 of CGST Act 2017 he has to compulsorily get registered so any kind of agent who is making taxable supply needs to get registered under GST immediately.

As per section 2(5) of CGST Act 2017 “agent” means a person, including a factor, broker, commission agent, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;

8. Input Service Distributor, whether or not separately registered under this Act

Input service distributor has to get compulsory registration under GST. As per 2(61) of CGST Act 2017 “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;

9. OIDAR services from a place outside India to an unregistered person in India

OIDAR services refer to services provided through the medium of the internet without the physical interaction of the supplier and recipient of services.

For example – advertising on the internet, providing cloud services, online supplies of digital content, digital data storage, online gaming, etc.

Every non-resident service provider providing OIDAR services to the unregistered person in India is required to obtain GST registration compulsorily. Further, such service providers have to appoint an authorized signatory (Indian) in India possessing a valid PAN.

Summary: As per the above provision if a person is supplying online information and data base access or retrieval from outside India then that person has to get itself registered under GST irrespective of the turnover in the previous year. E.g. Netflix providing services outside India then Netflix has to get itself registered and pay taxes under normal charge.

10. Such other person or class of persons as may be notified by the Government on the recommendations of the Council.

FAQ on Compulsory Registration

Q1 Is registration necessary if only interstate supply of Nil rated goods is being made?

Ans:   If exclusively making supplies of Nil rated supplies, registration is not compulsory. Kindly refer section 23 of CGST Act.

Q2 My all outward supplies are export services. In this case is it compulsory to register under GST?

Ans:   Yes. Since, exports are zero rated, one needs to register for GST to claim refunds.

Q3 In case the principal and job worker are located in different states, is it necessary for the job worker to obtain compulsory registration?

Ans:   No. Where the principal and the job worker are located in different States, the requirement for registration flows from section 24(i) of the CGST Act which provides for compulsory registration of suppliers making any inter-State supply of services. However, exemption from registration has been granted in case the aggregate turnover of the inter-state supply of taxable services does not exceed Rs 20 lakhs or Rs. 10 lakhs in case of special category States except Jammu & Kashmir in a financial year vide notification No. 10/2017 – Integrated Tax dated 13.10.2017. Therefore, a job worker is required to obtain registration only in cases where his aggregate turnover, to be computed on all India.

Q4 Whether the registration under GST is compulsory by Transport Service Provider.

Ans:   No, if the entire services supplied by the transporter are covered under the reverse charge mechanism under section 9 (3).

Case Laws /AAR Ruling Under GST

1. Electronic commerce operator – Where applicant is providing services and doing activities through electronic network of own website and facilitated one of plat- form to recipient of services on electronic basis through their internet website and operate his business, applicant is squarely covered as Electronic commerce operator and liable for registration under section 24 – Sadashiv Anajee Shete , In re [2018] 100 taxmann.com 291 (AAR – Maharashtra)
2. Reverse charge, in case of – A person is liable for registration if it has GST liability under reverse charge mechanism irrespective of situation that it has no liability to pay GST as supplier of goods and/or services – Sonka Publications (India)(P.) Ltd, In re [2018] 97 taxmann.com 288/69 GST 553 (AAR – New Delhi)
   
3. Others – Once GST is levied on service of facilitating common input supplies provided by the applicant to its distinctly registered units and ITC thereof is availed by recipient unit, the applicant is required to register itself as an input service distributor for distribution of ITC on common input supplies as per provisions of section 24 – Cummins India Ltd., In re [2019] 103 taxmann.com 126/73 GST 517 (AAR -Maharashtra)

CONCLUSION: –

In the GST Regime All the businesses exclusive supplying goods whose turnover exceeds Rs 20/ 40 lakh  in a financial year are required to register as a normal taxable person. However, the threshold limit is Rs 10 lakh if you have a business in north-eastern states.This process of registration is called GST registration. For certain businesses like casual taxable person,E-commerce operator etc, registration under GST is mandatory irrespective of their turnover during the financial year.