A business person needs to collect and pay GST, if obliged or liable to obtain Registration.
Compulsory registration [section 19 (1) of Model law]
Generally, the obligation to obtain registration arises, if turnover exceeds threshold or under certain special circumstances (like, casual taxable person, non-resident taxable person, person obliged to deduct tax at source, person effecting interstate sale etc, as specified in Schedule III of model law).
Circumstances specified in Schedule III are detailed in the next communication.
Voluntary registration
1. A person, though not liable may obtain voluntary registration, and all provisions of law, applicable to RTP, would apply to him. [Section 19 (3) of Model law]
2. A person having multiple business verticals in a State may obtain separate registration for each business vertical, subject to prescribed conditions. [Section 19 (2) of Model law]
Business vertical is defined [section 2 (18) of Model law] to mean: it shall have meaning assigned to business segment in Accounting Standard 17 issued by the Institute of Chartered Accountants of India.
Unique Identity Number (in case of certain specified institutions)
Any specialized agency of United Nations Organization or any Notified Multilateral Financial Institution and Organization, Consulate or Embassy of foreign countries and any other Notified person or class of persons, shall obtain a Unique Identity Number ("UIN"), in prescribed manner, for purpose(s) notified, including refund of taxes on notified supplies of goods and/or services received by them. [Section 19 (6) of Model law]
Exemption
Central or a State Government may, on recommendation of Council, notify category of persons exempted from obtaining registration. [Section 19 (12) of Model law]
Procedure
- Any person obliged to obtain registration shall apply, for registration within 30 days from date on which obligation arises, in or as per prescribed manner and conditions. A separate registration under CGST law and for each of the States (where he is liable) is essential. [Section 19 (1) of Model law]
- A person registered under earlier law (other than Input Service Distributor) need not apply for fresh registration under GST law and shall follow prescribed procedure.
- To obtain Registration, applicant must have Permanent Account Number issued under Income Tax Act [Section 19 (4) of Model law]. However, a non-resident taxable person may be granted registration on the basis of any other prescribed document. [Section 19 (4A) of Model law]
- If a person liable to be registered fails to obtain registration, Proper Officer may, in addition to any other action, proceed to register such person in prescribed manner. [Section 19 (5) of Model law]
- Registration or UIN, shall be granted or rejected after due verification in or within prescribed manner and period. [Section 19 (7) of Model law]
- Application for registration or UIN shall not be rejected without giving show cause notice and opportunity of being heard. [Section 19 (8) of Model law]
- Registration certificate ("RC") shall be issued in prescribed form, with effective date. [Section 19 (8A) of Model law]
- Registration or UIN Certificate shall be considered as granted after prescribed period (of issuing certificate), if no deficiency is found and communicated. [Section 19 (9) of Model law]
- Grant or rejection of application for registration or UIN under CGST or SGST law shall be deemed to be grant or rejection of application under SGST or CGST law. [Section 19 (10)/(11) of Model law]
Business considerations and impact
Generally
- Under GST law there may be multiple registrations: CGST and IGST under Central law and each of the States under SGST laws.
- Under Central law, it may not be possible to have only one registration in respect of businesses in all the states including for CGST and IGST.
- Under State law, it may be possible to have only one registration in respect of all places of business in a State; it may also be possible to have multiple registrations in respect of different places of business in a state (having regard to commercial and business considerations).
- In respect of each registration, prima facie, separate compliance requirements may be essential; it could be complied through a common network, namely, GSTN. However, presently, apparently, it is under debate and no clarity in that behalf.
- Suppose a business person decides to have more than one registrations in respect of different places of business in a State, he may have to comply with all requirements under State GST law in respect of each of such business place including filing of returns, payment, refund, Credit and so on. Possibly, there may not be any inter se adjustments (of payment, credit etc) feasible and/or visible (presently, in Model law) among and / or between different business places.
- Voluntary registration in respect of new taxable person or business may be desirable to ensure availability of Credit and use thereof (subject to clarity and/or Rules in that behalf).
Goods and services
In case of dealing in goods in any manner constituting business on account of its nature and the past experience, there may not be significant difficulties in complying with state -wise registrations.
However, in respect of service business, although, there may not be any place of business in a particular state but services may be performed or received in that state (from a service provider). In such a situation, taxable person may face several challenges and, in particular, in capacity in which it would be liable to pay tax (like, casual taxable person or non-resident taxable person or as RTP and nature of thereof (intrastate or interstate).
In case of non-residents, issue which may throw challenges could be: whether tax payable on reverse charge mechanism or whether non-resident will have to pay tax as non-resident taxable person by obtaining registration and complying with related requirements?
Existing business
- There may not be any need to obtain fresh registration but may have only to comply with additional requirements as may be prescribed. A business may have multiple registrations under Earlier law. It may be necessary to ensure appropriate registrations having regard to business needs and considerations. In that, single or multiple registration needs attention.
- Continuation of multiple registrations in a state may have to be considered having regard to relevant business and other factors including provisions of GST law.
- Compliance with additional requirements would be inevitable for various purposes of GST law.
- Expansion of business by establishing a new business or new unit or place of business and registrations thereof may have to be decided having regard to commercial factors including eligibility to avail and use credit.
New business
- Obviously, Registration will be necessary and, in relation thereto, decisions may be necessary having regard to factor(s) considered above in addition to its own factors.
- Voluntary registration may have to be considered to ensure availability of credit in respect of input or input services.
Well these are some considerations for debate and deliberations.
