PROFESSIONALS ARE NOT CASUAL PERSONS UNDER GST

[Dr. Sanjiv Agarwal]

The understanding of any legal provision is personal to the individual - be it assessee, professionals / consultants or revenue officers. This can be challenged. However, judge's interpretation becomes the court's stand.

There are untested news items and views of people who claim that professionals providing services in other States (inter-state) shall have to be registered in such state as a 'casual person' and shall have to pay Goods and Services Tax accordingly. However, if professionals can be termed as casual professionals, then such an understanding may lead to chaos and may not hold legally correct.

While taxable person is defined in section 2(107) of CGST law to mean a person who is registered or liable to be registered under section 22 or 24 of the CGST law, every supplier shall be liable to be thus registered. Only taxable services are liable to be tax which could be inter-state or intra-state. Taxable person will have place of business with address and inter or intra state shall be determined accordingly. This is not so with casual business.

As per section 2(20) of CGST law 'casual taxable person' means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union Territory where he has no fixed place of business. Further in term of section 24 of the CGST law, casual taxable person making taxable supply shall be liable to be registered under GST law.

Casual taxable persons are those persons who undertake business activities in a casual or on temporary basis. They have no fixed place of business (e.g. traders in trade/ business fairs or exhibitions). Such persons may provide or may get involved in supply or acquisition of goods and / or services in any capacity i.e., as principal, agent or in other capacity. However, it should be in taxable territory, in course of furtherance of business.

Two features are crucial for a taxable person to be categorized as casual taxable person. One that such person 'occasionally' undertakes transactions involving supply of goods and / or services. 'Occasionally' generally means over a short period of time say few days, weeks or months. Two, such taxable person does not have a permanent place of business in the relevant State. He should not have fixed place of business in taxable territory.

Owing to the fact that a casual taxable person does not have a permanent place of business in the State, special treatment has been provided for such taxable persons in respect of their registration, provision of security, filing of returns and the assessments.

Can person be a 'taxable person' as well as 'casual taxable person' at the same time. The answer is big 'No'. Those who understand that a CA from Delhi doing audit of a bank is Varansai (UP) is a casual taxable person for this inter-state supply may not be correct. Similarly, Amitabh Bachhan who has his place of business in Mumbai (place of business / fixed establishment / casual residence) doing a film shoot in Bangalore does not become a casual person for such shoot or even for a concert performance.

Media ought to act responsibly on such reports and better check with the legal opinion from different and reliable sources. One needs to understand the concept of casual taxable person as well as the logic behind the same. It is desirable that Government also comes out with suitable clarifications to set at rest such confusion / remarks.

Discussions to this article

[MARIAPPAN GOVINDARAJAN]

I endorse your views, Sir