24.2 Compulsory registration of Persons making inter-State taxable supply of goods

Question-1 [ICAI-I-N19-O-8b(ii)-2] [Inter-state taxable supply of Goods]

Examine, with reason, whether registration is required, under CGST Act, in the following cases

Soft Wings of West Bengal, exclusively trading in garments, supplies its taxable goods in various States of India from its outlet in West Bengal. Aggregate turnover of Soft Wings is Rs.35 lakh.

Answer

The threshold limit for registration in the State of West Bengal for the persons engaged exclusively in supply of goods, is Rs.40 lakh. However, registration is compulsory if the supplier is engaged inter-State supply of goods irrespective of the quantum of aggregate turnover. The threshold exemption is not available in case of inter-State supply of taxable goods. Thus, Soft Wings is required to obtain registration.

Question-2 [ICSI-P-D21-2c-5] [Intra-state and inter-state taxable supply]

ABC Ltd. of Jaipur, Rajasthan engaged in business was making till 28.02.2021 Intra-state supplies of the taxable goods. Total value of taxable supplies of goods till 28.02.2021 was of Rs.16,50,000. However, on 01.03.2021, it has effected Inter-state supply of taxable goods amounting in total of Rs.3,00,000. Manager (Taxation) of ABC Ltd. is of the view that it is not required to get registered under GST law since its aggregate turnover is not likely to exceed Rs.20,00,000 during the financial year 2020-21. However to become sure seeks your opinion as a consultant relating to his view as to requirement of registration under GST.

Advise suitably to the company ABC Ltd in the matter of requirement of registration as per provisions contained under the CGST Act, 2017.

Answer

The opinion of the Manager (Taxation) of ABC Ltd. is not correct. As per section 24 of CGST Act, 2017 person making inter-state taxable supply are compulsorily required to obtain registration.

Section 24 is an overriding section that makes it mandatory to obtain registration by certain prescribed persons even though the conditions prescribed u/s 22 are not fulfilled. Hence, ABC Ltd. despite having the turnover below the thresh hold limit of 20 lakh is mandatorily required to obtain registration.

As per provisions of section 25 of the CGST Act, 2017 every person who is liable to be registered u/s 22 or 24 shall apply for registration in every such State or Union territory in which he is so liable within 30 days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed.

Thus, ABC Ltd. is required to obtain registration up-to 31.03.2021, because of making of Inter State supply of taxable goods on 01.03.2021

Question-2A [ICAI-I-M19-7c(i)-2]

State with brief reason, whether following suppliers of taxable goods are required to register under the GST Law:

Mr. Raghav is engaged in wholesale cum retail trading of medicines in the State of Assam. His aggregate turnover during the financial year is Rs.9,00,000 which consists of Rs.8,00,000 as Intra-State supply and Rs.1,00,000 as Inter-State supply.

Answer

Person making any inter-State taxable supply of goods is required to obtain registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.

Thus, in the given case Mr. Raghav is required to obtain registration compulsorily under GST laws even though his aggregate turnover does not exceed the threshold limit of Rs.10 lakh [since Assam is a Special Category State] in the financial year.

Question-3 [FAQ-Online-31] [Interstate Exempt Supply]

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

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

Question-4 [ICAI-F-D21-4b(i)-1] [Inter-state Taxable and Exempt Supply]

Comment on the liability to get registered under the GST law in the given situation for the financial year 2020-21.

Miss Riddhima is exclusively engaged in the export of readymade garments from the State of Rajasthan and her export turnover during the year is Rs.17 lakh. Apart from export turnover, she has earned interest on bank FDR for Rs.2 lakh also.

Answer

Export of goods is treated as inter-State supply. Miss Riddhima is liable to obtain registration compulsorily irrespective of the quantum of her aggregate turnover since she is engaged in making inter-State supply (exports) of goods.

24.2.1 Persons making inter-State supplies of taxable services whose AT < Rs.20 or Rs.10 lacs is exempt from registration

Question-1 [ICAI-I-N19-O-8b-4] [Inter-state taxable supply of Services]

Examine, with reason, whether registration is required, under CGST Act, in the following case:

Aadhav Computers of Gujarat is providing computer maintenance service. Aggregate turnover of Aadhav Computers is Rs.15 lakh which comprises both inter-State and intra-State supply.

Answer

(i) Registration is compulsory for suppliers engaged in inter-State supply. However, as per Notification No. 10/2017 IT dated 13.10.2017, threshold exemption of Rs.20 lakh [Rs.10 lakh in case of Special Category States of Mizoram, Tripura, Manipur and Nagaland] is available in case of inter-State supply of taxable services.

Therefore, Aadhav Computers (aggregate turnover Rs.15 lakh) is not required to obtain registration even though it is engaged in inter-State supply of taxable services.

Question-1A [ICMAI-I-Ch5-Ex6]

Mr. CMA Manish, an unregistered person under GST, has place of profession in Bhubaneswar, Odisha, supplies taxable services to Infosys Ltd, a registered person under GST in Bangalore. Answer the following:

(a) Is it inter-State supply or intra-State supply.

(b) Who is liable to pay GST. Note:

Mr. CMA Manish turnover in the P.Y. is Rs.18 lakhs.

Answer-1A

Any person making inter-state supply has to compulsorily obtain registration.

However, Services providers providing aggregate supplies including inter-state services up to Rs.20 lakh will be exempted from GST vide N No. 10/2017-Integrated Tax dt. 13-10-2017.

(a) It is inter-State supply.

(b) Mr. CMA is not liable to pay IGST. Since, registration is not made mandatory to him.

Question-2 [FAQ-Online-35] [Export of service]

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.

24.2.2 Job worker engaged in inter-state supply of services to RPs is exempt from registration subject to conditions

Question-1 [FAQ-D18-Ch3-35] [Job Worker]

Whether the job worker will have to be compulsorily registered?

Ans. No, a Job worker is a supplier of services and will be obliged to take registration only when his turnover crosses the prescribed threshold of 20/10 Lakhs.

24.3 Compulsory registration of CTP making Taxable Supply

Question-1 [ICSI-E-D22-67-1]

As per Section 24 of CGST Act, 2017, which out of the following statements is true for a Casual Taxable Person (CTP).

(A) Registration required only for supply of services not for goods

(B) Registration required only for supply of goods not for services, if turnover exceeds threshold limit

(C) Registration not mandatory but may opt voluntarily

(D) Registration mandatory

Question-1A [ICMAI-F-J18-1(iv)-2]

(iv) A casual taxable person is required to obtain registration where he makes

(a) Taxable inter-State supply.

(b) Taxable inter-State or intra-State supply.

(c) Taxable inter-State or intra-State supply whose proposed value exceeds Rs. 20 lakhs.

(d) In none of the above situations.

24.3.1 CTP making inter-state taxable supplies of specified handicraft goods or products and whose AT < threshold limit as per section 22(1) is exempt from registration

Question-1 [ICAI-I-N21-8a-5]

Mr. Q, a casual taxable person of Gujarat state is a trader of taxable notified handicraft goods. It makes supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh. Turnover for Oct, 2021 is Rs.18 Lakh.

(i) Explain the provisions of registration for casual taxable person under GST. Examine whether Mr. Q is liable for registration or not?

(ii) What will be the answer if Mr. Q makes trading in taxable notified products instead of taxable notified handicraft goods which involves 75% making on machine and 25% by hand?

Answer

Section 24(ii) requires compulsory registration of CTP who is making taxable supplies, even if his aggregate turnover does not exceed threshold limit.

However, vide notification no 56/2018-Central Tax dt. 23-10-2018, a threshold limit of Rs.20 lakh (Rs.10 lakh in case of specified Special Category States) is available for registration to a casual taxable person:

(i) who is making inter-State taxable supplies of notified handicraft goods and notified hand-made goods,

(ii) whose aggregate turnover should be less than threshold limit, and

(iii) who has obtained a PAN and

(iv) who has generated an e-way bill.

Advice

(i) In the given case, since Mr. Q is engaged in supplying notified handicraft goods and its aggregate turnover does not exceed Rs.20 lakh, he will not be liable to registration provided he fulfills other conditions specified herein.

(ii) In case Mr. Q is engaged in trading of notified products which are predominantly made by machine, he will not be eligible for the exemption from registration under aforesaid provisions and needs to take compulsory (mandatory) registration.

Quesiton-1A [ICAI-F-N20-6(b)(i)-2]

Decide with reason whether the registration is required under CGST Act, 2017 in the following cases:

A casual taxable person (CTP) has provided inter-State supply of notified products being textiles hand printing amounting to Rs.19.25 lakh during the month of January, 2020. Those products were made by craftsmen by both hand and machines equally. CTP had obtained PAN and generated e-way bill for supply.

Answer

Section 24(ii) requires compulsory registration of CTP who is making taxable supplies, even if his aggregate turnover does not exceed threshold limit.

However, vide notification no 56/2018-Central Tax dt. 23-10-2018, a threshold limit of Rs.20 lakh (Rs.10 lakh in case of specified Special Category States) is available for registration to a casual taxable person:

(i) who is making inter-State taxable supplies of notified handicraft goods and notified hand-made goods,

(ii) whose aggregate turnover should be less than threshold limit, and

(iii) who has obtained a PAN and

(iv) who has generated an e-way bill.

CTPs making inter-State taxable supplies of notified products, when made by the craftsmen predominantly by hand even though some machinery may also be used in the process, have been exempted from obtaining registration if their aggregate turnover does not exceed Rs.20 lakh [Rs.10 lakh for specified special category States].

Since, in the given case, the notified products were made by craftsmen by both hand and machines equally, they are not eligible for exemption and are required to obtain registration mandatorily.

24.4.1 Person who is only making outward supplies, tax on which is liable to be paid on RCM by the recipient u/s 9(3) is exempt from registration

Question-1 [FAQ-D18-Ch3-7] [Making only RCM Supply]

Whether a person exclusively engaged in supplies which are under reverse charge mechanism need to register in GST?

Ans. No. Such persons are exempted from registration vide Notification No. 05/2017-Central Tax dated 19th June, 2017

24.8 Compulsory registration of agent who make taxable supplies on behalf of other taxable persons

Question-1 [ICAI-I-M19-7c(ii)-2] [ICMAI-F-J19-3a(ii)-2] [Agent]

State with brief reason, whether following suppliers of taxable goods are required to register under the GST Law:

Mr. S.N Gupta of Rajasthan is engaged in trading of taxable goods on his own account and also acting as an agent of Mr. Rishi of Delhi. His turnover in the financial year 2017-18 is of Rs.12 lakhs on his own account and Rs.9 lakhs on behalf of principal. Both turnovers are Intra-State supply.

Answer

Persons who make taxable supply of goods on behalf of other taxable persons whether as an agent or otherwise are required to obtain registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.

Aggregate turnover includes all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.

Since Mr. S.N Gupta is also acting as an agent of Mr. Rishi of Delhi, he is required to obtain registration compulsorily under GST laws.

24.10.1 Persons making supplies of services, other than supplies specified u/s 9(5) through an ECO and whose AT < Rs.20/10 lacs is exempt from registration

Question-1 [ICAI-F-Ch9-Ex5] [Supplies specified u/s 9(5)]

AB Pvt. Ltd., Pune provides house-keeping services. The company supplies its services exclusively through an e-commerce website owned and managed by Hi-Tech Indya Pvt. Ltd., Pune. The turnover of AB Pvt. Ltd. in the current financial year is Rs.18 lakh.

Advise AB Pvt. Ltd. as to whether they are required to obtain GST registration.

Will your advice be any different if AB Pvt. Ltd. sells readymade garments exclusively through the e-commerce website owned and managed by Hi-Tech Indya Pvt. Ltd.?

Answer

1. Statutory Provision

a) As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be registered in the State/UTs from where he makes a taxable supply of goods and/or services, if his aggregate turnover (AT) in a FY exceeds the threshold limit.

The threshold limit for AB Pvt Ltd is Rs.20 lacs

b) Section 24(ix) requires compulsory registration of Persons who supply goods or services or both, other than supplies specified u/s 9(5) through such ECO who is required to collect tax at source u/s 52 must be registered without applying threshold limit.

c) Section 2(45) of the CGST Act defines ECO as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

Electronic commerce is defined u/s 2(44) to mean the supply of goods or services or both, including digital products over digital or electronic network.

d) Notification No. 17/2017 CT (R) dated 28.06.2017 issued u/s 9(5) specifies services by way of house-keeping, except where the person supplying such service through ECO is liable for registration u/s 22(1), as one such service where the ECO is liable to pay tax on behalf of the suppliers.

Comments

In the given case, AB Pvt. Ltd. provides house-keeping services through an ECO. It is presumed that Hi-Tech Indya is an ECO which is required to collect tax at source under section 52.

However, house-keeping services provided by AB Pvt. Ltd., which is not liable for registration under section 22(1) as its turnover is less than Rs.20 lakh, is a service notified u/s 9(5).

Thus, AB Pvt. Ltd. will be entitled for threshold exemption for registration and will not be required to obtain registration even though it supplies services through ECO.

In the second case, AB Pvt. Ltd. sells readymade garments through ECO. Such supply cannot be notified u/s 9(5) as only supplies of services are notified under that section. Therefore, in the second case, AB Pvt. Ltd. will not be entitled for threshold exemption and will have to compulsorily obtain registration in terms of section 24(ix).

24.14 Miscellaneous Questions

Question-1 [ICAI-I-Ch7-2]

Examine whether the liability to register compulsorily u/s 24 arises in each of the independent cases mentioned below:

(i) Meenu, a supplier in Maharashtra, is exclusively engaged in supply of potatoes produced out of cultivation of her own land, within Maharashtra and also outside Maharashtra.

(ii) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Further, it provides services of refining of oil to customers. Total turnover of supply of machine oil is Rs.10 lakh, supply of petrol is Rs.5 lakh and supply of services is Rs.6 lakh.

(iii) Tilu is working as an agent, he is supplying taxable goods as an agent of Tiku (who is registered taxable person) and its aggregate turnover does not exceed Rs.20 lakh during the financial year.

Answer

(i) Section 24 of the CGST Act provides that persons making any inter-State taxable supply of goods are required to obtain registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.

However, as per section 23, an agriculturist, to the extent of supply of produce out of cultivation of land, is not liable to registration.

Meenu is exclusively engaged in cultivation and supply of potatoes. Thus, she is not liable to registration irrespective of the fact that she is engaged in making inter-State supply of goods. Further, Meenu will not be liable to registration, in the given case, even if her turnover exceeds the threshold limit.

(ii)

Section 24 of the CGST Act specifies the categories of persons who are required to be mandatorily registered under GST irrespective of the quantum of their aggregate turnover. In the given case, Jinu Oils does not fall in any of the specified categories. Therefore, it is not required to obtain registration compulsorily under GST.

However, as per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be registered in the State/Union territory from where he makes a taxable supply of goods and/or services, if his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a person making supply of both goods and services is Rs.10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland and Rs.20 lakh for the rest of India. Thus, the applicable threshold limit for the State of Gujarat is Rs.20 lakh for supply of both goods and services. Further, aggregate turnover includes exempted turnover of goods or services.

Accordingly, Jinu Oils is liable obtain registration since its aggregate turnover [Rs.21 lakh (including turnover of exempt supply of petrol)] exceeds the threshold limit of Rs.20 lakh.

(iii)

Section 24 of the CGST Act provides that persons who make taxable supply of goods and/or services on behalf of other taxable persons whether as an agent or otherwise are required to obtain registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.

Therefore, Tilu will be mandatorily required to obtain registration.

Question-1A [ICAI-I-M19-O-8a-6]

(a) Examine the liability of compulsory registration under section 24 of the CGST Act, 2017, in each independent cases mentioned below:

(1) Meenu, a supplier in Maharashtra, is engaged in supply of potatoes within Maharashtra and also outside Maharashtra, whose turnover exceeds threshold limit under GST Law.

(2) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Total turnover of machine oil is Rs.20 lakh and of petrol is Rs.15 lakh.

3) Tilu is working as an agent, he is supplying goods as an agent of Tiku (who is registered taxable person) and its aggregate turnover does not exceed Rs.20 lakh during the financial year.

Question-2 [ICMAI-F-D18-1(iv)-2] [ICSI-E-D22-76-1]

A person is not liable for registration under GST Act if

(a) Non-resident person making a taxable supply.

(b) An agriculturist selling produce out of cultivation of land.

(c) Dealer engaged in inter-state trade above threshold limit for registration.

(d) Casual taxable person making taxable supply.

Question-2A [ICSI-E-D18-O-90-1]

Find out from the following, who are the persons not liable for registration under section 30 of the CGST Act, 2017:

(A) non-resident making taxable supply

(B) person supplying exempted goods and services or goods or services which are not liable for tax under GST

(C) an agriculturist, to the extent of supply of produce out of cultivation of land

(D) both (B) and (C)

Question-2B [ICSI-E-J19-O-80-1]

Which of the following is not liable to be registered as per provisions of CGST Act, 2017:

(A) Person supplying exempted goods

(B) Non-resident making taxable supplies

(C) Deductor of tax at source

(D) Supplier on behalf of the other person

Question-2C [ICSI-E-D19-O-99-1]

Which of the following persons is not liable for registration under GST law?

(A) Electronic commerce operator

(B) Input service distributor

(C) Payer of reverse charge

(D) Agriculturists supplying produce out of cultivation of land

Question-3 [ICSI-E-J21-O-94-1]

Which out of the following persons is not liable for registration under GST law?

(A) Agriculturist engaged in making any supply other than supply of produce out of cultivation of land

(B) Agriculturist supplying produce out of cultivation of land

(C) Payer of reverse charge

(D) Input service distributor

Question-4 [ICSI-E-D20-81-1]

Section 24 of the CGST Act, 2017 specifies the list of persons who are required for taking of compulsory registration under the CGST Act, 2017. Find out from the following list who are required to take compulsory registration as per section 24 of the CGST Act, 2017 :

(i) Input Service Distributor

(ii) An Inter-state supplier of taxable goods

(iii) A person required to pay tax under reverse charge

(iv) A person required to deduct tax u/s 51

(A) (ii) & (iv)

(B) (i), (iii) & (iv)

(C) (i) & (iv)

(D) (i), (ii), (iii) & (iv)

Question-5 [ICSI-E-J19-O-94-1]

Section 24 of the CGST Act, 2017 lists categories of persons who are required to take registration even if they are not covered under section 22 of the Act. Find out from the following categories of persons who are being required to take registration as per section 24 of the CGST Act, 2017 :

(i) Casual taxable person

(ii) Non-resident taxable person

(iii) Recipient of service under Reverse Charge

(iv) Interstate supplier

(v) Input service distributor

(A) (i), (iii) and (v)

(B) (i), (ii), (iv) and (v)

(C) (i), (ii) and (v)

(D) All the 5 in (i) to (v)

Question-6 [ICSI-E-J22-83-1]

Which of the following is not covered under section 24 of CGST Act, 2017, for compulsory registration :

(A) Casual Taxable Person

(B) Non-Resident Taxable Person

(C) Input Service Distributor

(D) Persons making any Intra-State taxable supply

Question-7 [ICSI-E-J21-75-1]

Which of the following persons need not obtain registration under GST on mandatory basis ?

(A) Persons making any inter-state taxable supply

(B) Persons who are required to pay tax under reverse charge

(C) Input Service Distributor

(D) Supply of produce from the land cultivated by agriculturist

Question-8 [ICMAI-I-D19-5(a)(ii)-4] [ICMAI-I-D18-5(a)-7]

Discuss the following with reference to the provisions of CGST Act:

Persons who are compulsorily required to be registered.

Question-9 [ICSI-P-D19-O-4A(ii)-5]

Briefly explain whether the following persons are liable for registration as per the provisions of the CGST Act, 2017 :

(a) Sachin, an exclusive supplier of Non-taxable goods only.

(b) Person making inter-State taxable supply aggregating Rs.8,00,000 only.

(c) Where the tax on the goods dealt with are payable on reverse charge basis.

(d) Jagdish, an individual, who undertakes cultivation of land by the labour of family and his own labour for producing paddy, to the tune of Rs.60 lakhs.

(e) Ranjan, a trader is coming to Mumbai from Bangalore for an exhibition. The exhibition is to continue for seven days in Mumbai. Ranjan expects supply of goods for Rs.8,00,000.