Goods and Services Tax (GST) is a comprehensive tax regime introduced in India on July 1, 2017, to replace multiple indirect taxes levied by both central and state governments. One of the key features of the GST system is its registration framework, which forms the foundation of the entire tax structure. GST registration is mandatory for businesses exceeding certain turnover thresholds and for those involved in the interstate supply of goods and services. This article aims to provide a detailed understanding of GST Registration and its legal provisions, along with relevant sections of the GST law and case laws that have shaped the legal landscape.
Legal Provisions for GST Registration
GST registration is governed by the Central Goods and Services Tax Act, 2017 (CGST Act), State Goods and Services Tax Act (SGST Act), and the Integrated Goods and Services Tax Act, 2017 (IGST Act). The registration process is designed to establish the identity of a taxpayer under the GST regime and enable them to fulfil their tax obligations.
Section 22 – Persons Liable for Registration
Section 22 of the CGST Act outlines the persons who are required to obtain GST registration. As per Section 22(1), a person who carries out business (including supply of goods or services) and whose aggregate turnover exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states) in a financial year is required to register under GST. It is important to note that the threshold limit for registration varies for service providers and goods suppliers.
Additionally, casual taxable persons and non-resident taxable persons are mandated to obtain registration regardless of turnover. The threshold limit also does not apply to persons engaged in interstate supply or those involved in the supply of taxable goods or services through an e-commerce platform.
The Orissa High Court clarified the scope of mandatory registration in the case M/s. Nivedita Chit Fund Pvt. Ltd. v. State of Odisha. The court ruled that any person carrying out business activities and exceeding the prescribed turnover limit must be registered, and non-compliance would result in penalties. The case also emphasized the need for clear communication from the government regarding the registration threshold, ensuring taxpayers’ awareness.
Section 24 – Mandatory Registration for Specific Categories
Section 24 provides a list of persons who are required to register under GST irrespective of their turnover. These categories include:
- Interstate suppliers: Any person supplying goods or services across state borders must obtain registration.
- Casual taxable persons: Those who engage in business temporarily in India, such as event organizers or traders with temporary establishments, must register.
- Non-resident taxable persons: Non-residents who supply goods or services in India are required to register.
- E-commerce operators: Operators facilitating the supply of goods and services through their platforms must also be registered.
- Input Service Distributors: Businesses distributing input tax credits to various branches must register.
- Aggregators: Any person who supplies services under their brand name but relies on third-party service providers is required to register.
Procedure for GST Registration
The GST registration process is an online procedure available on the GST Portal. According to Section 25 of the CGST Act, any person who is liable for registration or who wishes to voluntarily register must apply online in Form GST REG-01.
The registration process involves:
- Submission of Application: The applicant must submit personal and business details, including PAN, Aadhar number (if applicable), business address, and the nature of business activities.
- Verification of Documents: The GST authorities verify the application and documents.
- Issuance of GSTIN: If the application is approved, the taxpayer is assigned a Goods and Services Tax Identification Number (GSTIN).
Section 29 – Cancellation of Registration
Section 29 of the CGST Act provides the legal provisions for the cancellation of GST registration. A taxpayer’s registration may be cancelled under the following circumstances:
- Voluntary Cancellation: A registered person may apply for cancellation of registration under Section 29(1) if they are no longer liable to be registered under GST (e.g., if their turnover falls below the threshold limit).
- Non-compliance: GST registration may also be cancelled if a person fails to file returns for a specified period (typically six months) or the authorities believe that the person is not conducting business in good faith.
- Involuntary Cancellation: The authorities can cancel registration if the person fails to comply with GST laws or engages in tax evasion.
Upon cancellation, the taxpayer must submit a final return in Form GSTR-10.
In the case Vikas Kumar Verma v. Union of India, the Delhi High Court ruled that if the taxpayer fails to file GST returns for an extended period, the registration could be cancelled, even if the taxpayer can demonstrate the business has not ceased. It emphasized that the non-filing of returns is a serious issue and could lead to the cancellation of registration under the GST regime. The court emphasized that the GST authorities have the power to ensure compliance and that taxpayers must file returns within the prescribed timelines to avoid penalties or cancellation.
Section 30 – Revocation of Cancellation
Section 30 allows for the revocation of cancellation under certain circumstances. If a taxpayer’s GST registration is cancelled by the authorities, they can apply for the revocation of cancellation in Form GST REG-21 within 30 days of the cancellation order. The proper officer will decide whether to approve the application for revocation based on compliance with all legal requirements.
Section 26 – GST Identification Number (GSTIN)
GSTIN (Goods and Services Tax Identification Number) is a unique 15-digit number assigned to each registered taxpayer under GST. Section 26 of the CGST Act outlines the structure and requirements of GSTIN, which include:
- PAN (Permanent Account Number) of the taxpayer.
- State code where the taxpayer is located.
- A unique number is assigned to the entity.
GSTIN is a key element of the registration process and ensures the tracking of all tax activities of the registered taxpayer.
Legal Challenges in GST Registration
Despite the clear legal provisions for GST registration, there have been various challenges faced by businesses and professionals under the new tax regime:
- Complexity in Procedure: The online application and verification process for GST registration can sometimes be cumbersome, especially for non-resident taxable persons or businesses that deal with multiple states. Taxpayers must be aware of the requirements and ensure that they submit complete and accurate documents.
- Registration for E-commerce Operators: E-commerce platforms face unique challenges regarding compliance with tax collection at source (TCS). The liability for TCS rests with e-commerce operators, which has led to a dispute over the proper scope of their responsibilities.
- Cancellation and Reversal of Registration: Businesses sometimes face unjust cancellation of their registration due to non-filing of returns or delayed payments. Many small businesses have struggled with maintaining timely compliance, resulting in frequent cancellations of registration.
Conclusion
GST registration is essential for efficient tax collection and provides businesses with a transparent, digital platform. The CGST Act mandates registration for businesses exceeding the turnover threshold (Section 22) and specific categories like interstate suppliers and non-resident taxable persons (Section 24). While it offers benefits like Input Tax Credit and lawful participation in the supply chain, businesses must comply with registration and legal requirements to avoid penalties and challenges, ensuring smooth navigation of the system.
Contributed By – Kajal Rawat (Intern)