GST: Voluntary & Compulsory registration & its cancellation thereafter

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GST: Voluntary & Compulsory registration & its cancellation thereafter

Law doesn’t get complicates by initial insertion alone but also by every notifications, circulars, Press release, Amendment, Advance Ruling which all makes it complicated. Only option for the taxpayer is to remain updated about the ever changing provisions.

Here is a compilation of the rules with regard to GST Registration and its cancellationprovisions are contained in section 22, Section 24 & section 29 of Chapter VI of CGST Act 2017.

It may be noted that

  1. Section 22 prescribes conditions for persons liable for Registration having regard to the Threshold Limit,
  2. Section 24 stipulates mandatory registration for certain categories of persons irrespective of threshold limit.
  3. Section 29 stipulates the mode of cancellation of GST registration

Let us know more about it.

Section 22:

There is a cumulative conditions needs to be satisfied in order to fall within the ambit of GST registration i.e.

  1. Supplier
  2. Supplying Taxable goods or Services

iii.              aggregate Turnover exceeds the threshold limit.

The key feature of section 22 can be elaborated as under:

  1. Every supplier shall be liable to be registered in the state or union territory, other than special category states if they make a taxable supply of goods or services or both if their aggregate turnover in a financial year exceeds Rs. 20 Lakh.
  2. Where such person makes taxable supplies of goods or services or both from any of the special category State (like North east staes like Manipur, Sikkim, etc) then they shall be liable to be registered if their aggregate turnover in a financial year exceeds ten lakh rupees.
  3. It is further provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified. [Inserted by CGST Amendment Act, 2018]
  4. Notification No 10/ 2019 :
    Central tax dated 07.03.2019 provides exemption from registration for any person engaged in exclusive supply of Goods and whose aggregate turnover does not exceeds Rs 40 Lakh e. [Applicable w.e.f. 01.04.2019]. It means that the enhanced limit of Rs. 40 Lakh is exclusively for  supply of Goods only and not for supply of service.Threshold Limit for Special Category States has been revised and enhanced to Rs 20 Lacs w.e.f. 01.04.2019.
  5.  Special provisions for Casual Taxable Person or Non Resident Taxable person are prescribed as per Sec 27 of CGST Act, 2017
  6. If taxpayer has  taken the registration voluntarily even if the turnover has not crossed the threshold then they are mandatorily required to collect and pay tax to the Government irrespective of threshold limit.
  7. Section 2 sub section (6) of CGST Act defines “aggregate turnover” means the aggregate value of all
    i.  Taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),
    ii. Exempt supplies,
    iii. Exports of goods or services or both and
    iv. Inter-State supplies of persons having the same Permanent Account Number,All this has to be taken for entire country.

    However, the aggregate turnover shall excludes central tax, State tax, Union territory tax, integrated tax and cess;

  1. Aggregate Turnover is not unit or office based but a PAN based i.e., on all India basis and not State/Union Territory based.
  1. Aggregate Turnover must be carefully considered while making a determination whether requirement to register is there or not.
  1. The Threshold limit of turnover shall include all supplies made by the taxable person whether on his own account or made on behalf of all his principals i.e. supplies made by an agent.

Section 24:

It deals with the cases where there is a liability for compulsory GST Registration in certain case as it overrides Section 22 (1) which requires registration only if the turnover crosses the basic threshold limit. The cases covered by section 24 are as under:

  1. Persons making any inter-State taxable supply
  2.  Casual taxable persons making taxable supply

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

  1. Person who are required to pay tax under sub-section (5) of section 9
  2. Non-resident taxable persons making taxable supply
  3. Persons who are required to deduct tax under section 51, whether or not separately registered under this Act

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

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

  1. Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52
  2. Every electronic commerce operator who is required to collect tax at source under section 52.
  3. Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person; and

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

The key feature of section 24 can be elaborated as under:

  1. It may be noted that persons whose entire turnover is comprised of exempt turnover such persons shall also be liable to be registered if any of the situations listed in sec 24 are applicable.
  2. Notification No.10/2017:
    Integrated Tax dated 13.10.2017 as amended vide 3/2019-Integrated Tax dated 29-Jan-2019 w.e.f. 1-Feb-2019 :
    This Notification provides exemption to the supplier who supply interstate supplies of taxable services where turnover is not exceeding 20 Lacs. This relaxation is extended to such person supplying interstate services only and not goods.
  3. Notification No. 7/2017:
    Integrated Tax dated 14.09.2017 as amended vide Notification No. 2/2019-Integrated Tax dated 29-Jan-2019 w.e.f. 1-Feb-2019:
    This Notification provides exemption to job-workers making inter-state  supply of services to a registered person where aggregate turnover is not exceeding 20 lakh. The relief in terms of GST Registration provides to Small Job Workers making inter-State supply of services.
  4. Notification No. 3/2018:
    Integrated Tax, dated 22.10.2018 seeks to supersede Notification No. 8/2017-Integrated Tax, dated 14.09.2017:
    This Notification specifies categories of persons making inter-State taxable supplies of handicraft goods and having aggregate turnover up to 20 lakh shall be exempted from obtaining registration.
  5. Section 24 clause (vii) implies that an agent who make taxable supply of goods or services   or both on behalf of other taxable persons is required to register irrespective of threshold limit provided under section 22.
  6. Meaning of the word “Agent” has been defined under sub-section (5) of section 2 of the CGST Act as  “a person including a factor, broker, commission agent, arhatia, 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”From commercial angel, it is highly difficult to determine whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal.

    To determine the relationship under GST, one need check whether invoice for supply of goods is issued on behalf of the principal or not. Where the invoice for further supply is being issued by the agent in his name then Agent principal relationship exist. However, it may be noted that in cases where the invoice is issued by the agent to the customer in the name of the principal then Agent principal relationship does not exist.

    This issue has been clarified in the Circular No. 57/31/2018-GST dated September 4, 2018 and also Circular No. 73/47/2018-GST, dated November 5, 2018.

Section 29:

Cancellation or Suspension of GST Registration(

Section 29 read as under:

The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where-

  1. a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
  2. b) there is any change in the constitution of the business; or
  3. c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24:

Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed. [Inserted by CGST Amendment Act, 2018]

The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,

  1. a) a registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or
  2. b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
  3. c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
  4. d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
  5. e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
  6.         f) Provided that the proper officer shall not cancel the registration without giving the person
  7.        g) Can opportunity of being heard.

Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed. [Inserted by CGST Amendment Act, 2018]

The key feature of section 24 can be elaborated as under:

  1. Rule 21 of the CGST Rules, 2017, provides for cases of cancellation of registration and includes the following:
    a. does not conduct any business from the declared place of business; or
  2. issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules made there under or
  3. Violates the provisions of section 171 of the Act or the rules made there under.
  4. Violates the provision of rule 10A.
  5. It may be noted thatevery registered person required to file a final return “within three months” of the date of cancellation or date of order of cancellation, whichever is later, in GST FORM GSTR-10.
  6. Notification No. 3/ 2018-Central Tax, dated January 23, 2018 for cancellation of voluntary registration:
    Notification provides that a person who has obtained voluntary registration can apply for cancellation before expiry of one year from effective date of registration.
  7. In all the cases where a registered person applied for cancellation of registration, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.

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