In this Mail, we shall deal with Taxable person, an agency through which Transaction based tax would be collected.
Meaning of Taxable person [Section 9 of Model Law]
Meaning
It means:
- a person
- carrying on business at any place in India or State,
- who is registered or obliged to obtain registration under Law.
Thus, essence is that Taxable person must be carrying on business.
Person [Section 2(74) of Model Law] is inclusively defined and includes:
- An individual
- a Hindu undivided family
- a company
- a firm
- a Limited liability partnership
- an association of persons (whether incorporated or not, in or outside India)
- a body of individuals (whether incorporated or not, in or outside India)
- any corporation established by Central State or Provincial Act
- a body corporate incorporated outside India
- a registered cooperative society
- a local authority
- government
- society, as defined under the Societies Registration Act
- trust, and
- every artificial juridical person, not covered above
Thus, all forms of organisations or entities (through which business may be carried on) are covered and even includes government.
Business [Section 2(71) of Model law]
It is inclusively defined. Generally, "business" means: activity of making, buying and selling goods or providing service in exchange for money.
It includes:
- Any of the following activities (included activities):
- any trade,
- commerce,
- manufacture,
- profession,
- vocation or
- any other similar activity.
- Any transaction connected with or incidental or ancillary to the above.
- Supply or acquisition of goods (including capital assets) and services in connection with starting or closure of business.
- Provision by a club, association, society, or any such body (for a subscription or another consideration) of facilities or benefits to its members as the case may be.
- Admission, for a consideration, of persons to any premises; and
- Services supplied by a person as holder of office, accepted in course or furtherance of his trade, profession or vocation (like directorship of a company).
To determine whether an activity constitutes business or not, following are not relevant:
- whether or not it is for a pecuniary benefit,
- whether or not there is volume, frequency, continuity or regularity of such transaction.
Based on above, it can be inferred that:
Any person,
- carrying on any activity classified as trade, commerce, profession etc,
- carrying on any transaction included in definition,
- irrespective of existence of irrelevant considerations,
- registered or obliged to obtain registration under Law (liability to register and related matters including person is not obliged to obtain registration would be detailed in a subsequent communication),
would be regarded as taxable person (responsible for collection and payment of Tax).
Thus, even a government when carries on any trade, commerce etc or included activities, it would be regarded as a taxable person. A non-profit organisation carrying on business may be considered as taxable person.
Having regard to above, it can be inferred:
Any person:
- not carrying any trade, commerce, profession or the like, or
- nor carrying on any included activity, or
- not registered or obliged to obtain registration,
cannot be considered as taxable person.
Accordingly, any charitable or religious organisation or a government discharging certain functions may not be regarded as Taxable person. Similarly, any individual, when sells personal effects or goods, he may not be regarded as Taxable person.
