The goods and services Tax (GST) is becoming a reality. In order to prepare you and your business for this landmark change in regulations the team at Arkay & Arkay brings you this series on the new regulations. Feel free to reach out to us should you have any questions or queries on GST and how it affects your business.
Introduction to GST : Registration
Registration Under GST
Administration under GST is depended upon the unique ID provided to each service provider or, in certain cases, service receivers. Since GST is proposed to be governed with minimal human intervention it is critical that each entity operating within the GST ecosystem have a unique ID to allow for easy linking of transactions with other entities or , as we shall soon note, transaction with or units within the same entity. The presence of a unique ID allows for identification and accounting of all transactions and facilitates easy credit and , where eligible, refunds of taxes paid under the act.
Persons Liable to register under GST
Registration under GST has to be obtained by the following class of entities :
- Persons currently assessed under any tax that is proposed to be subsumed under the GST act
- Persons whose threshold in goods and/or services exceeds Rs 20 lakhs ( Rs 10 Lakhs for North Eastern States
- Casual suppliers of goods and/or services
- Non Resident suppliers of goods and/or services
- Specified persons ( UN, WHO etc)
- Individuals receiving specified services in excess of thresholds to be defined.
Documents required for Registration
Documents that need to be submitted for obtaining registration under GST are :
- Proof of constitution of business (Certificate of incorporation, Partnership Deed etc.)
- Details and proof of principal place of business
- Details of bank accounts of applicant
- Details of Authorised signatories
- Photographs of Authorised signatories
Applications need to be authenticated by way of digital signatures of the authorised signatory. There are no fee’s applicable for registration.
Provisions of Model law on Registration
Provisions for Registration are covered in Chapter VI of the Model GST law which has been reproduced as follows. Our comments and explanations of the provisions follow.
“(1) Every person who is liable to be registered under Schedule III of this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed:
Provided that if the person, other than an Input Service Distributor, is registered under an earlier law, it shall not be necessary for him to apply for fresh registration under this section and he shall follow the procedure as may be prescribed in this behalf.”
A Taxable person is defined in section 9 of the act as any person who:
- Carries our business in India and
- Is registered or required to be registered under schedule III of the act.
Para 5 of Schedule III of the act defines the category of persons who need to be registered under the act, they include :
- Any person supplying goods and services across state borders ( Inter-State Supply)
- Persons required to pay tax under reverse charge mechanism
- Casual dealers of goods and services
- Non resident taxable person
- Persons required to deduct tax at time of payment under Section 37, these include :
- Central of State departments or establishments
- Local Authorities
- Government Agencies
- Other categories of persons as the central/state government may notify based on the recommendation of the GST council
- Person supplying goods /services on behalf of another registered taxable person
- Input service distributors
- Persons supplying goods or services through eCommerce operators
- eCommerce operators as defined by section 43B(e)
- Service aggregators who supplied services under his own brand name or trade name.
- Job workers supplying goods after the completion of job works
“(2) Notwithstanding anything contained in sub-section (1), a person having multiple business verticals in a State may obtain a separate registration for each business vertical, subject to such conditions as may be prescribed.
Persons with more than one business vertical within a state will also have to obtain multiple registrations under this act for each such vertical. This is in addition to separate registration in each state that Persons operating in more than one state will have to obtain in each state that they operate in. Though to make things easy for the applicant he does not need to file separate applications for each state. A single application based registration process is proposed.
It is important to note that tax will be charged on supply of goods from business vertical to another even though both of them may be owned and operated by the same entity. Further as per Rule 4(1)(b) of the registration provisions, where any one business vertical becomes ineligible for availing benefits of the composition levy as proposed under section 8, all of his other business verticals will also be deemed to become ineligible for benefits under the composition levy scheme.
(3) A person, though not liable to be registered under Schedule III, may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered taxable person, shall apply to such person.
(4) Every person shall have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961) in order to be eligible for grant of registration under subsection (1), (2) or (3).”
The registration process for resident individuals is based on the PAN registration obtained by such persons. In a way similar to the current process followed to obtain registrations under the extant service tax regulations.
Persons who are liable to be registered under the GST provisions will have to file an application for registration within 30 days of such liability arising. To be registered under GST the person desiring registration will have to fill and submit form GST REG 01 through the online mechanism mandated by the GST regulations.
Part A of the form GST REG01 will consist of information such as PAN, mobile number and email address of the person requiring registration and will have to be verified through OTP. Upon such verification an application reference number shall be generated. Using the reference number the applicant shall have to submit Part B of the form along with additional documents. The system will issue an automatic receipt of the application to the applicant in form GST REG02.
Upon receipt of the application an officer shall have to examine the application within 3 working days and if satisfied grant registration to the person through form GST REG06. He can also ask for additional information from the applicant by way of form GST REG03.
The applicant can provide such additional information in form GST REG04 . Should the officer not be satisfied even after the receipt of additional information requested he can reject the application through form GST REG05
The GST application and approval process had automatic approvals built in wherein if no action has been taken by the relevant officer within 3 days of the submission of the application the application is deemed to be accepted and registration is automatically granted. Similarly if no action has been taken within 7 days of the receipt of clarifications/additional information requested by the concerned officials the application will deemed to have been accepted and registration will be granted.
Transitional Provisions for those registered under previous acts.
As would be the case most eligible entities under GST would already have been registered under state VAT, CST, or Centrally administered Service tax laws. For such entities a separate transitional mechanism has been proposed.
Where information on such previous registration and PAN number is available to the GST administration a provisional certificate of registration in form GST REG21 shall be automatically generated with the GSTIN to be allotted to the dealer of goods and or services.
After the receipt of such form and ID number the dealer is required to file a proper application for regularization of registration in form GST REG20 within 30 days of receipt of the provisional registration.
The concerned officers will review such application and within the timelines stipulated either dispose off or grant registration to the applicant person.
If the documents are found to be in order by the officer, he will make an order granting registration in form GST REG06 to the dealer. Where however the application and documents submitted are not in order or if the officer is not satisfied with the information provided then he may issue a show cause notice to the applicant in form GST REG23. Should the applicant be unable to satisfy a notice of cancellation can be issued to him in Form GST REG22
There may be cases where a person was registered under the previous tax laws that preceded GST but is not eligible to pay taxes under the GST regulations. In such a scenario the person can file can file form GST REG24 to apply for cancellation of his provisional registration under the act.
Registration for Persons required to deduct or collect tax at source (TDS/TCS)
Such persons may move an application in form GST REG07 either through the facilitation center or through the online portal. After due verification and within the timelines as specified above, the application may be approved and registration granted in form GST REG06 or rejected vide form GST REG08
“4A) Notwithstanding anything contained in sub-section (4), a non-resident taxable person may be granted registration under sub-section (1) on the basis of any other document as may be prescribed.”
A Non-resident Supplier is a person who, in the course of business, makes an intra-state supply of goods or services or both, but is not a resident in the state in which he has applied for registration, but is already registered in any other state. Such a person can move an application for registration using form GST REG10 at least 5 days before the proposed date of commencement of business. Upon the receipt of such application the applicant foreign entity will be given a temporary registration number.
Using such a temporary registration number the entity will have to make advance payment of taxes equivalent to the estimated tax liability for the period for which the person wishes to be registered in India. The rules with respect to verification and grant of registration shall apply to non residents in a manner similar to regular applications.
“5) Where a person who is liable to be registered under this Act fails to obtain registration, the proper officer may, without prejudice to any action that is, or may be taken under this Act, or under any other law for the time being in force, proceed to register such person in the manner as may be prescribed.”
Where the officers of the department through any survey, search, enquiry or other mechanism, find any person found liable to be registered under GST they can move suo moto to register such person under GST by issuing an order in Form GST REG13. Such registration shall be temporary registration and be valid from the date on which the order In form GST REG13 was issued.
Every person who is issued such order has the option of appealing against the grant of such registration or file an application under the regular process in form GST REG01 for registration.
“6) Notwithstanding anything contained in sub-section (1), any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of persons as may be notified by the Board / Commissioner, shall obtain a Unique Identity Number, in the manner prescribed, for the purpose(s) notified, including refund of taxes on the notified supplies of goods and/or services received by them.
(7) The registration or the Unique Identity Number, shall be granted or, as the case may be, rejected after due verification in the manner and within such period as may be prescribed.
(8) The proper officer shall not reject the application for registration or the Unique Identity Number without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.
(8A) A certificate of registration shall be issued in the prescribed form, with effective date as may be prescribed.
(9) A registration or an Unique Identity Number shall be deemed to have been granted after the period prescribed under sub-section (7), if no deficiency has been communicated to the applicant by the proper officer within that period.”
While such organization are ordinarily considered exempt from local taxation, they are still required for registration under GST for the purposes of information gathering and to ensure completeness in the online ledger for service providers and receivers.
Therefore, such organizations are required to file an application in form GST REG09 upon the receipt of which the officer concerned shall perform due verification and grant registration to the applicant along with a unique ID no in form GST REG 06
“(10) Notwithstanding anything contained in sub-section (7), any rejection of application for registration or the Unique Identity Number under the CGST Act / SGST Act shall be deemed to be a rejection of application for registration under the SGST Act / CGST Act.
(11) The grant of registration or the Unique Identity Number under the CGST Act / SGST Act shall be deemed to be a grant of registration or the Unique Identity Number under the SGST/CGST Act provided that the application for registration or the Unique Identity Number has not been rejected under SGST/CGST Act within the time specified in subsection(7).
(12) The Central or a State Government may, on the recommendation of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.”
In our opinion this can be a contentious matter. After all who gets to decide who is exempt and who is not, the center or the state? Since powers have been assigned to both here it seems both can come to separate conclusions!
Further, the council can only make recommendations and not directions to this effect. Therefore, will their recommendations be binding?
Registration of Casually taxable Persons and Non Resident Persons
“19A. Special provisions relating to casual taxable person and non-resident taxable person
(1) The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period of ninety days from the effective date of registration.
Provided that the proper officer may, at the request of the said taxable person, extend the aforesaid period of ninety days by a further period not exceeding ninety days.
(2) Notwithstanding anything to the contrary contained in this Act, a casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration under sub-section (1) of section 19, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such taxable person shall deposit an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is sought.
(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person and shall be utilized in the manner provided under section 35.”
A Non-resident Supplier is defined as a person who, in the course of business, makes an intra-state supply of goods or services or both, but is not a resident in the state in which he has applied for registration, but is already registered in any other state.
A casually taxable person may approach the department for registration in form GST REG01 in a manner similar to a normally taxable person. Except that such casually taxable person will be issued a temporary ID. Upon issuance of such ID the applicant is required to deposit in advance the foreseeable tax liability to be incurred during the period for which registration has been sought by him.
Such temporary registration is valid for a maximum period of 90 days but can be extended by 90 days upon the request of the applicant. Such application has to be made by the applicant in form GST REG25
Amendments to registration, Cancellation and Surrender of registration
“20.Amendment of registration
(1) Every registered taxable person shall inform the proper officer of any changes in the information furnished at the time of registration, or that furnished subsequently, in the manner and within such period as may be prescribed.
(2) The proper officer may, on the basis of information furnished under sub-section (1) or as ascertained by him, approve or reject amendments in the registration particulars in the manner and within such period as may be prescribed:
Provided that approval of the proper officer shall not be required in respect of amendment of such particulars as may be prescribed.
(3) The proper officer shall not reject the request for amendment in the registration particulars without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.
(4) Any rejection or, as the case may be, approval of amendments under the CGST Act/SGST Act shall be deemed to be a rejection or approval of amendments under the SGST Act/CGST Act.”
To effect any changes in registration obtained on account of change in address, goods, services, signatories etc. the dealer can file an application in form GST REG11 upon receipt of the application for such amendment the concerned officer may request for clarifications or additional documents in form GST REG03.
The applicant has to submit a response in GST REG04 within 7 days of the receipt of such intimation. Provided the concerned officer is satisfied that the changes requested are in order he will issue the applicant a fresh certificate of registration in form GST REG02
In the case of a change in PAN due to any reason the applicant will have to surrender his previous registration and move a fresh application for registration in form GST REG following the process as outlined after 19(4) above.
Surrender/Cancellation of registration under GST
“21. Cancellation of registration
(1) The proper officer may, either on his own motion or on an application filed, in the prescribed manner, by the registered taxable 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,
(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
(b) there is any change in the constitution of the business; or
(c) the taxable person, other than the person registered under sub-section (3) of section 19, is no longer liable to be registered under Schedule III.
(2) The proper officer may, in the manner as may be prescribed, cancel the registration of taxable person from such date, including any anterior date, as he may deem fit, where, –
(a) the registered taxable person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
(b) a person paying tax under section 8 has not furnished returns for three consecutive tax periods; or
(c) any taxable person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section19 has not commenced business within six months from the date of registration.
(3) Where any registration has been obtained by means of fraud, wilful misstatement or suppression of facts, the proper officer may cancel the registration with retrospective effect, subject to the provisions of section 29.
(4) The proper officer shall not cancel the registration without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.
(5) The cancellation of registration under this section shall not affect the liability of the taxable person to pay tax and other dues under the Act for any period prior to the
date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
(6) The cancellation of registration under the CGST Act/SGST Act shall be deemed to be a cancellation of registration under the SGST Act/CGST Act.
(7) Every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be prescribed in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher.
(8) The amount payable under sub-section (7) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed.”
Application for cancellation of registration has to be moved in form REG GST14 and should include details such as closing stock in hand at the time of the proposed surrender of the registration. This is required since the applicant has to pay in full the total amount of credit lying in their ledger at the time of cancellation of registration.
“22.Revocation of cancellation of registration
(1) Subject to such conditions and in such circumstances as may be prescribed, any registered taxable person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the prescribed manner within thirty days from the date of service of the cancellation order.
(2) The proper officer may, in the manner and within such period as may be prescribed in this behalf, by way of an order, either revoke cancellation of the registration or reject the application for revocation for good and sufficient reasons.
(3) The proper officer shall not reject the application for revocation of cancellation of registration without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.
(4) Revocation of cancellation of registration under the CGST Act / SGST Act shall be deemed to be a revocation of cancellation of registration under the SGST Act / CGST Act.”
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