Registration-Another State, Goods and Services Tax - GST

[CA Adarsh]

Query:-

The tax payer having taxable business in one state-Karnataka and another state he has business with completely exempted goods whether he is liable register in another state-Andhra Pradesh

Turnover of Karnataka is Rs 60 Lacs

Turnover of Andhra Pradesh is Rs 1 Crores from exempted goods.

Whether threshold of GST Registration PAN based?

Posts / Replies

[Sadanand Bulbule]

Dear querist

Plz refer following Section 23[1] of the APGST Act, 2017:

23. (1) The following persons shall not be liable to registration, namely,-

(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017; (Act No. 13 of 2017.)

In terms of above provision, your query is covered by this section and you are not liable for registration in the state of AP.

[DR.MARIAPPAN GOVINDARAJAN]

My doubt is - exempted income also included in the aggregate turnover which decides the registration.  

[Shilpi Jain]

Registration would be necessary in Karnataka but since AP has only exempted supplies - a view can be taken in the light of sec 23 that no registration is required in the State of AP.

However, in case there is any internal provision of services by AP to Karnataka, registration would be required in AP also.

[Sadanand Bulbule]

Dear querist

I offer my revised opinion:

In terms of Notification No. 10/2019-Central Tax dated 07/03/2019 issued under Section 23[2], any person whose "aggregate turnover", includes exempted turnover also, in the financial year does not exceed forty lakh rupees [ except persons engaged in making supplies of few notified goods] are exempt from obtaining registration under the Act.

Since turnover of your client exceeds threshold limit of Rs. 40 lakh, despite exempted turnover, he is liable for registration under the APGST Act.

I respectfully agree with the opinion of Dr. Govindrajan Sir.

Kind apology for earlier reply.

[KASTURI SETHI]

Dear Querist,

Yes. The turnover of exempted goods is required to be included. in aggregate turnover. The aggregate turnover  is  based on all India basis for same PAN. Hence GST registration is required to be obtained in Andhra Pradesh.

[Sadanand Bulbule]

Dear Sh. Sethi Sir ji

Thanks for your validation.

[Amit Agrawal]

A. Section 22 (1) states that 'every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds specified limits.

A1. As per Section 2(108), Taxable supplies include “taxable supply” means a supply of goods or services or both which is leviable to tax under this Act. And as per Section 2(6), “aggregate turnover" include taxable as well as exempt supplies. 

B. Section 23(1)(a) states that 'any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax shall not be liable to registration'

C. Section 25(1) states that 'Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such State or Union territory 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'. 

D. Section 25(4) states that 'A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.'. 

E. Section 25(5) states that 'where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.

Collective reading of above provisions, in my humble view, means the following in the context of query raised here: 

1. "Mandatory" registration u/s 22(1) is state / UT specific.

2. Merely because a tax-payer has obtained or required to obtain registration in one state u/s 22, he need NOT take registration for other business establishments which is lying in other states / UT IF these other business establishment/s are engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax AND IF these other business establishment/s are NOT required to take registration u/s 24. 

3. For purpose of GST Act (including Section 20), 'business establishment which is registered in a one particular state' and 'other business establishments which is lying in other states / UT' are treated as 'distinct person' even when these other business establishment/s are NEITHER registered NOR required to be registered under GST. 

4. For purpose of GST, 'business establishment in Andhra Pradesh' (as per facts given in the query) is 'distinct person' from 'business establishment which is registered in Karnataka' and such business establishment in Andhra Pradesh is exempted from taking registration under GST u/s 23(1)(a), 

5. Above position of law becomes more apparent if one notes "difference" between sub-section (4) & (5) of Section 25 and law-maker's need to make these separate provisions. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Sadanand Bulbule]

Dear all

"All things are simple when are reduced  to fundamentals".

Simplicity is more convenient than undesirable complexity. Opinions might be quite opposite, the but endurance is the same. It is not necessary to have a noble reply in every effort. Here the spirit is more relevant than the substance. The spirit is absolute and substance is variable. The querists are fed by the overflow of the magnificent wealth of the spirit of the experts on TMI. It is the free gift of their grandeur. And I am glad to accept it in gratitude and brotherhood. It takes sensitive honesty to evaluate the integrity of other man. That's all I can conclude.

[Sadanand Bulbule]

Plz read is as when they are reduced.

[Amit Agrawal]

Please read Para 5 from my above post at Serial No. 7 as follows:

5. Above position of law becomes more apparent if one see wordings used in Section 22(1) & 25(1) & then, note the "difference" between sub-section (4) & (5) of Section 25 and law-maker's need to make these separate sub-sections. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Just to add to my earlier posts:

While calculating "aggregate turnover" (as defined u/s 2(108)) for purpose of mandatory registration u/s 22(1), there is no doubt that one needs to take into account All-India basis turnover (i.e. including 'exempted turnover' from 'business establishment in Andhra Pradesh' (as per facts given in the query)).

However, this does not mean that registration is mandatory for 'business establishment in Andhra Pradesh' (as per facts given in the query) in view of exclusion provided in Section 23(1)(a) read with sub-sections (1), (4) & (5) of Section 25. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[CA Adarsh]

I wanted to take a moment to express my sincere gratitude for everyone for prompt response to my query. Your willingness to assist and share your insights has been immensely valuable to me. Thank you for your time and effort—it truly makes a difference!

[KASTURI SETHI]

Sh. Sadanand Bulbule Ji,

Sir, Pl. refer to your views at serial no.8 above.  Are you talking of sportsman spirit? Pl.clarify in a simple language so that I may be able to understand the essence hidden therein. 

[Sadanand Bulbule]

Respected Sethi sirji

I am a too small person to define the meaning of the word and world "spirit". It has multi-dimensional angles and meanings across the globe since time immemorial. In my limited understanding, it means basic force in its unalloyed form in quest for truth. The force to acquire pure knowledge. Every breath is a learning process, shifting our focus from selfishness to selflessness in ideas, words and action. Let the ego go, that is the "spirit" I  have understood.

"When there is light, there is no night". Its like what one feels when one looks at a squashed caterpillar, although a painful process. One can let oneself go and spread. Real "spirit" lies in taking others' sorrows and difficulties. Be it in any walk of life.

So also this D-Forum of TMI is taking the queries and trying to solace the querists to the possible extent, if not 100%.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

                             Sir,  Thank you very much for your comprehensive reply.

  You have used the phrase, ''pure knowledge". Knowledge itself means  awareness based on truth, facts, reason etc. What I want to say  that the word, 'pure' is already included in the word, 'knowledge'  Do you agree ?

[Sadanand Bulbule]

Dear Sh. Sethi Sirji

About your query at Sl No.15, what I have read is:

Pure knowledge does not depend on our senses.It stems from pure logic or pure mathematics. For instance, the knowledge that two plus two is four is pure knowledge.This is the absolute universal truth. While this concept may seem superficially simplistic, truth has many subtleties and intricacies that make defining "pure knowledge' much more complicated. And I cannot dare to define it beyond this.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

                               Sir, I agree with you.

[KASTURI SETHI]

Threshold limit is relatively related to GST registration, it being State specific.

[Padmanathan Kollengode]

I agree with views of Ld. friend Amit Ji in toto. His comprehensive and elaborately explained post can be used by the querist to defend his client at the time of adversity if need arises.