Registration liability under GST
If the lorry operator is unregistered and also recipient, who is a small
dealer not liable to pay tax and therefore unregistered, then as to what will be
the position of Registration and ultimately of GST, as both are URDs?
As per the provisions of GST Act, the person is liable for registration, if
its turnover is exceeding the prescribed limits. Reference can be made to
section 22(1) of the CGST Act. The section is reproduced below.
“22. (1) 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 twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services
or both from any of the special category States, he shall be liable to be
registered if his aggregate turnover in a financial year exceeds ten lakh
The turnover limit of ₹ 20 lakhs is required to be seen on Pan India basis.
In the given facts of the query the turnover of lorry operator appears to be
below ₹ 20 lakhs. Therefore, it is not liable for registration.
So far as recipient is concerned there can be liability for it to pay GST
under Reverse Charge Mechanism (RCM). Reference can be made to the provision of
section 9(3) of the CGST Act which is reproduced below.
“9. (3) The Government may, on the recommendations of the Council, by
notification, specify categories of supply of goods or services or both, the tax
on which shall be paid on reverse charge basis by the recipient of such goods or
services or both and all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying the tax in relation to the
supply of such goods or services or both.”
The Government has issued Notification No.13/2017-Central Tax (Rate) dated
28-6-2017 under above section 9(3). The relevant part of the notification is as
“Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 13/2017- Central Tax (Rate) New Delhi, the 28th June, 2017
GSR……(E). – In exercise of the powers conferred by sub-section (3) of
section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the
Central Government on the recommendations of the Council hereby notifies that on
categories of supply of services mentioned in column (2) of the Table below,
supplied by a person as specified in column (3) of the said Table, the whole of
Central tax leviable under section 9 of the said Central Goods and Services Tax
Act, shall be paid on reverse charge basis by the recipient of the such services
as specified in column (4) of the said Table:-
|Sl. No.||Category of Supply of Services||Supplier of service||Recipient of Service|
Supply of Services by a goods transport agency (GTA) in respect of
transportation of goods by road to- (a) any factory registered under or governed
by the Factories Act, 1948 (63 of 1948); or (b) any society registered under the
Societies Registration Act, 1860 (21 of 1860) or under any other law for the
time being in force in any part of India; or (c) any co-operative society
established by or under any law; or (d) any person registered under the Central
Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax
Act; or (e) any body corporate established, by or under any law; or (f) any
partnership firm whether registered or not under any law including association
of persons; or (g) any casual taxable person
|Goods Transport Agency (GTA)||
(a) Any factory registered under or governed by the Factories Act, 1948 (63 of
1948); or (b) any society registered under the Societies Registration Act, 1860
(21 of 1860) or under any other law for the time being in force in any part of
India; or (c) any co-operative society established by or under any law; or (d)
any person registered under the Central Goods and Services Tax Act or the
Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or
the Union Territory Goods and Services Tax Act; or (e) any body corporate
established, by or under any law; or (f) any partnership firm whether registered
or not under any law including association of persons; or (g) any casual taxable
person; located in the taxable territory.
Thus, the recipient covered under above notification will be liable to pay
GST at 5% under RCM. The small dealer, who is unregistered and not a casual
dealer or a partnership firm, will not be covered by above notification.
Therefore in the case of dealer, in above query, the
situation can be seen
as per the status of the said dealer.
If the dealer is covered by any of above notified categories then it will be
required to obtain registration as per provision of section 24(iii) of CGST Act
and will also be liable to pay GST under RCM.
A pays rent of ₹ 7,000/- for commercial property owned by B. Both are not
registered under GST. What will be the position under GST Law?
Under GST Act, rent for commercial property is deemed to be service and GST
is attracted. However, as stated above, as per section 22, the liability for
registration arises upon exceeding turnover of ₹ 20 lakhs. Since the rent income
will be below ₹ 1 lakh as well as assuming that there is no other turnover the
owner will not be liable for registration.
A is also unregistered. It is assumed that he is not liable for registration,
as his turnover is not exceeding ₹ 20 lakhs. Under such situation there will not
be any liability on A also.
Even if A is registered dealer till no liability is attracted. There would
have been liability under RCM as per section 9(4). However, the operation of
said section is time being withhold and hence at present no liability on A.
Exemption vis-à-vis GST
A is an exempted unit. What will be the position under GST Act?
From the query, it appears that the reference to Exemption is towards
Exemption Schemes granted by State Government for Industrialisation of Backward
Areas. For example, in Maharashtra there were schemes like Package Scheme of
Incentives, whereby exemption from sales tax payment was granted to Eligible
units with ceilings. There are units having unexpired exemption limits.
Under GST Act, there is no continuation of Exemption schemes. Therefore, the
benefit of exemption is lost. All units are required to discharge liability.
Thought this may be requirement for smooth implementation of GST, we feel that
there is gross injustice to such units. There is also breach of promissory
estoppel. The Government can introduce the said benefit by some other indirect
manner to compensate such units. In J & K, the Government has initiated to
compensate such units at par with exemption. However under GST, at present the
position is that there is no exemption scheme and even the units exempt till
30-6-2017 are also required to discharge liability from 1-7-2017.