Model Law GSTgstpanacea.com/.../Registration-Process-under-GST-regime.pdf · 2016-09-07 · regist...

Registration Process

under GST Regime

Model Law GST

ABSTRACT

[Registration is Assesse’s first interaction with

the Tax Department and one should be careful

in approaching Department as non-

registrations might invite penalties.

Registration also makes eligible to issue Tax

Invoice or Transfer of Input Tax Credits.]

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REGISTRATION PROCESS UNDER GST REGIME

1. Introduction ................................................................................................................................................... 3

2. Benefits to Taxable Persons taking registration under GST regime ................................................................ 3

3. Persons Liable to be registered ...................................................................................................................... 6

4. Assumptions for Registration Process under GST Regime .............................................................................. 7

5. Salient features of registration process .......................................................................................................... 8

6. Structure of GSTIN ....................................................................................................................................... 10

7. Switching over Compounding Scheme to Normal Scheme and Vice-Versa ................................................... 11

8. How to Obtain Registration under GST? ....................................................................................................... 11

a. Separate Application Forms for Registration ........................................................................................... 12

b. Persons Obtaining New Registration under GST ...................................................................................... 12

9. Approval Process .......................................................................................................................................... 14

10. Migration of Existing Tax Payers ............................................................................................................. 14

Migration Provisions are covered under section 142. ...................................................................................... 15

Section 143: Amount of CENVAT credit carried forward in a Return to be allowed as Input Tax Credit. ........... 16

11. Amendment In the Registration .............................................................................................................. 16

12. Cancellation or Surrender of Registration ............................................................................................... 17

13. Consequences for Non-Registration ........................................................................................................ 18

14. Source of this Article ............................................................................................................................... 19

15. DISCLAIMER ............................................................................................................................................ 19


REGISTRATION PROCESS UNDER GST REGIME

As discussed in our earlier write up on GST Law & Practice Part-1, that three panels were

constituted to assist Empowered Committee on implementation on GST in India.

In 2015, Reports were issued by these committees with respect to:

Refund Process

Registration

Payment Process

Earlier we had discussed Returns proposed under GST Regime.

We would be discussing proposed Registration Process in Model Law GST. Registration

is assesse’s first interaction with the Tax Department and one should be careful in

approaching Department as non-registrations might invite penalties (Section 66(1)(x))

and other consequences. Registration also makes eligible to issue Tax Invoice (Section

23) or Transfer of Input Tax Credits (Section 37A).

GST Panel-1• Determination of Revenue Neutral

Rate (RNR)

• Place of Provision of Services Rules

GST Panel-2• GST on Inter State Supplies

• GST on Imports

GST Panel-3

• Dual Administrative Controls

• Threshold Limits & Other Exemptions including list of common exempted items.

http://gstpanacea.com/services/model-law-gst-law-practice-part-1/

http://gstpanacea.com/services/returns-proposed-goods-service-tax-gst-laws/


1. INTRODUCTION

Registration of a business with the tax authorities implies obtaining a unique identification

code from the concerned tax authorities so that all the operations of and data relating to

the business can be agglomerated and correlated. In any tax system this is the most

fundamental requirement for identification of the business for tax purposes or for having

any compliance verification program. Registration under Goods and Service Tax (GST)

regime will confer following advantages to the business:

Legally recognized as supplier of goods or services.

Proper accounting of taxes paid on the input goods or services which can be

utilized for payment of GST due on supply of goods or services or both by the

business.

Pass on the credit of the taxes paid on the goods or services supplied to

purchasers or recipients.

The taxable person will have to take a separate registration, even though the taxable

person may be supplying goods or services or both from more than one State as a single

legal entity.

2. BENEFITS TO TAXABLE PERSONS TAKING REGISTRATION UNDER GST REGIME

Registration under GST gives the following benefits under:


Section 16(2): Manner of taking Input Tax Credit

A person who has applied for registration under the Act within thirty days from the date

on which he becomes liable to registration and has been granted such registration

shall, subject to such conditions and restrictions as may be prescribed, be entitled to take

credit of input tax in respect of inputs held in stock and inputs contained in semi-finished

Unique Identification

Link All Transactions

Proper Accounting

Passing of Tax Credit

Ease in Compliance


or finished goods held in stock on the day immediately preceding the date from which he

becomes liable to pay tax under the provisions of this Act.

Thus if a person is not registered he will not be able to take Input Tax Credit. So to take

ITC one has to get registered within 30 days.

Case Study:

Case-1: ABC Ltd applies within 30 days but Registration is granted after 30 days. Will he

be able to take Credit?

Yes, as application was made within specified time i.e. 30 days though registration is

granted later. Because application should be filed within 30 days. Later approval of

registration will not affect its status to take credit.

Case-2: ABC Ltd applies within 30 days but Registration is Rejected by Department. Can

ABC Ltd eligible for credit?

NO, both conditions are not satisfied. Application was made within 30 days but there was

no approval as application was rejected.

Remedy: If he re-applies and that is approved by the Department then can he take credit

from beginning?

No, as re-applies will be considered new application and in such case such approval will

not make eligible ABC Ltd to take credit since beginning.

In such case ABC Ltd should file appeal against REJECTION ORDER and pursue

ORIGINAL APPLICATION and get Registration from original date then only ABC Ltd

will be eligible to take credit from beginning.


3. PERSONS LIABLE TO BE REGISTERED

Section 19 deals with Normal Registration covered under Schedule III, Voluntary

Registrations etc. whereas Section 19A deals with Special Provisions for Registration of

Casual Taxable Person and Non-Resident Taxable Person.

The following Dealers providing services are required to be registered under GST:

Persons registered to pay Existing indirect taxes

All india Gross Turnover more than Threshold Limit

Making Interstate Supplies

Casual & Non-Resident Suppliers

Making Voluntary Registration

Specific Class of Persons


4. ASSUMPTIONS FOR REGISTRATION PROCESS UNDER GST REGIME

Assumptions for Registration under GST are as follows:

A person can neither collect GST from customers nor claim the any input tax credit

of GST

There will be a threshold of Gross Annual Turnover including exports and

exempted supplies above which any person engaged in supply of Goods or

Services or both will not be required to take registration.

Any dealer exceeds the threshold limit is required to take mandatory Registration

under GST regime.

Effective date pf registration will date of application in all cases

A person can take voluntary registration under GST & can also enter the input

chain even prior to crossing the threshold limit, provided that he does not opt for

compounding scheme

There will be a higher threshold limit for persons opting for compounding scheme

& hence can opt to pay tax at a specified percentage of the turnover without

entering the credit chain.

Irrespective of turnover, if a taxable person carries out any inter-state supply and/or

is liable to pay GST under reverse charge, he will be compulsorily required to take

registration.

An individual importing services for personal consumption will not be liable to pay

GST under reverse charge or register under GST.

All UN Bodies seeking to claim refund of taxes paid by them would be required to

obtain a unique identification number (ID) from the GST portal.

A unique identification number will be given by the respective state tax authorities/

PSUs not making outwards supplies of GST goods (thus not liable to obtain GST

registration).


The Input Services Distributor are required to obtain GST Identification Number

(GSTIN) for distributing the credit of GST paid on services proposed to be used at

multiple location which are separately registered.

All registered persons, whether with the Centre or State under any of the tax

statues being subsumed in GST, would be allotted a GST registration number

called Goods and Services Tax Identification Number on voluntary basis. Dealers

who are below the GST threshold will have option to remain in GST chain.

Tax Authorities, in case of enforcement cases, may grant suo-moto registration. If

such person does not have PAN, the registration would be initially temporary and

later converted into a PAN based registration.

5. SALIENT FEATURES OF REGISTRATION PROCESS

Salient features of registration process under GST Regime are as follows:

PAN will be mandatory for registration under GST

Unified Application to both Tax Authorities Central as well as State

Application to filled within 30 days after crossing the threshold limit

State-wise registration having presence in more than one state

Approval for the application within three working days

Within a PAN, separate registration for separate business verticals within a state

is possible with respect to certain condition:

o Input Tax Credit across the business verticals of such taxable persons shall

not be allowed unless the Goods or Services are actually supplied across

the verticals.


o All Business verticals, separately registered will be considered as a single

legal entity for the purpose of recovery of dues.

Rejection of application for Registration under CGST/SGST shall be deemed

to be a rejection of application for Registration under SGST/CGST Act.

[Section 19(10)]

Grant of registration under CGST/SGST Act shall be deemed to be grant of

registration 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 Section 19(7). [Section 19(11)]

Application shall not be rejected without giving a notice to show cause and without

giving the person a reasonable opportunity of being heard. [Section 19(8)]


6. STRUCTURE OF GSTIN

Structure of GSTIN will be as follows:

STATE

CODE

PAN ENTITY

CODE

BLANK

CHECK DIGIT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

15 Digit Assessee Code

State-Wise Allocation

Based on PAN

13 Digit for Business Verticals of entities with same PAN in same State

14th Digit left blank for Future Use

15th Digit to Checksum


7. SWITCHING OVER COMPOUNDING SCHEME TO NORMAL SCHEME AND VICE-VERSA

Switching over from Compounding scheme to Normal scheme and vice-versa would be

dealt in the manner described below:

Any existing taxpayer not under Compounding Scheme under the present Acts

may opt for compounding scheme if eligible only from the beginning of the next

financial year.

Compounding dealer may be allowed to switch over to normal scheme even during

the year if they so want with a condition that they cannot switch over to

compounding scheme again during the same financial year.

Any existing taxpayer under the Compounding scheme upon crossing the

Compounding threshold will be switched over to the Normal scheme automatically

from the day following the day of crossing the Compounding threshold.

For the changes covered by 1st to 3rd Points above, the validation in the return

module should change automatically under intimation to the concerned taxpayer

and both the tax authorities.

8. HOW TO OBTAIN REGISTRATION UNDER GST?

There are various forms for various entities depending upon the type of registration. A

registration form is developed by GSTN as per the standard practices / protocols on IT

notified by the Govt. of India e.g. for digitally capturing a postal address, name etc. In

case there is no standard practice for any of the field, the same should be developed by

the GSTN and form designed accordingly.


A. SEPARATE APPLICATION FORMS FOR REGISTRATION

Separate application forms are to be designed for:

Multiple registration for business verticals of same legal entity (it must be

registered already) within a State

Application for registration in more than one State (that can be filed at one go)

Amendments to existing Registration(s)

Option to avail / withdraw from the Compounding scheme

Enrolment of Tax Practitioner or Facilitation Centre if provided for in the GST Law

Assignment of Role (by a dealer) to TP/FC, as agent of the dealer if so provided

for in the GST Law

Application for new registration on account of Succession / Amalgamation / De-

merger etc. of existing GST registrants

Application by UN bodies for getting a Unique Identification Number (ID)

B. PERSONS OBTAINING NE W REGISTRATION UNDER GST

For Obtaining Registration all taxable persons are required to follow the following Steps:

All taxable persons are required to interact with the Tax Authorities through the

GST Common Portal set by the Goods and Service Network.

The process for obtaining voluntary as well as mandatory registration is same

under GST.


Also the Same applicant can file more than one registration for other states where

the applicant seeks registration or for more than one business vertical located in a

single or multiple states.

Applications not submitted through Digital Signature to be supported by sending a

signed copy of summary extract o the form.

o Processing of application and grant of registration even before signed copy

received.

o Cancellation to be initiated if no signed copy received

Email and SMS based alerts to the applicants.

No application fee (Advance Tax in case of casual Suppliers)

Application can also be filed through Facilitation Centres (FCs) or through Tax

Return Preparers (TRPs)

Documents Required under the GST Registration process are as follows:

Proof for Constitution of Business

Proof for Principal Place of Business

Bank Details

Details of the Authorized Signatory

Photograph of the Authorized Signatory


9. APPROVAL PROCESS

The Approval process will goes in the following format under GST:

Online verification of certain details like PAN, CIN, Bank Account (If possible) and

Aadhaar

Online communication of application to jurisdictional

authority by the backend modules of tax authorities

3 common working days for tax authorities to respond

Deemed approval after 3 days

Single opportunity to tax authorities to raise query, if any – 7 days for response

and 7 days for action

Mostly post registration visits based on risk profile

Online grant of registration

Log-in id and temporary password communicated to the tax payer

Downloadable Registration Certificate to be provided by GSTN

Refusal to register by one tax authority deemed as refusal by both

Communication of reason for refusal of registration

10. MIGRATION OF EXISTING TAX PAYERS

All existing registered persons, whether with the Centre or State under any of the tax

statues being subsumed in GST, would be allotted a GST registration number called

Goods and Services Tax Identification Number (GSTIN) on voluntary basis. Dealers who

are below the GST threshold will have option to remain in GST chain. [page 6 of Report

on GST Registration by Joint Committee]


MIGRATION PROVISIONS ARE COVERED UNDER SECTION 142.

In case of existing Tax Payers who are either registered with states or with centre or with

both the system shall be designed to migrate cleaned and verified data form the existing

database to the GST Common Portal and a GSTIN is generated. With regards to the

migration of data of the existing registrants, following steps are necessary:

The process of migration of data must be started sufficiently in advance so that the

business of existing registrants does not suffer and transition from the present

system to GST is smooth.

State tax authorities will communicate the GSTIN/password to taxpayers, with

instruction to log on the GST portal and fill up the remaining data.

In case, PAN has been validated but the email or mobile numbers of dealers are

not available, such dealers may be advised through newspaper advertisement to

visit the GST portal and use the following data for user authentication:

o VAT-TIN

o PAN

o Date of Birth/Date of Incorporation in DDMMYYYY format. (This data is

available with PAN Database)

Date of birth of proprietor in case of Proprietorship firm.

Date of incorporation in case of all other types of dealers

In those cases where PAN has not been validated, State VAT department will have

to collect the taxpayers


SECTION 143: AMOUNT OF CENVAT CREDIT CARRIED FORWARD IN A RETURN TO BE ALLOWED AS

INPUT TAX CREDIT.

A registered taxable person shall be entitled to take, in his electronic credit ledger, credit

of the amount of CENVAT credit carried forward in a return, furnished under the earlier

law by him, in respect of the period ending with the day immediately preceding the

appointed day in such manner as may be prescribed.

11. AMENDMENT IN THE REGISTRATION

Section 20 deals with 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 approve or reject

amendments in the registration particulars in the manner and within such period

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

Capturing registration information is not a one-time activity and any change in critical

information should be entered at the common portal within a stipulated time period.

Amendment in the registration will be done in the following way:

Changes to other registration data can be done on self-service basis


Change to compounding scheme will require submission of reasons and

prescribed relevant documents

The same change is required to be approved by the Tax Authorities.

All amendments in the details in registration application form will be retained in the

database of the GSTN and will be made visible to the tax authorities.

12. CANCELLATION OR SURRENDER OF REGISTRATION

Section 21 deals with Cancellation of Registration

In the following cases, the registration can be either surrendered by the registrant or

cancelled by the tax authorities:

Closure of business of Tax Payer

Gross Annual Turnover including exports and exempted supplies (to be calculated

on all-India basis) falling below threshold for registration

Transfer of business for any reason including due to death of the proprietor of a

proprietorship firm

Amalgamation of taxable person with other legal entities or de-merger

Non-furnishing of Returns for three consecutive tax period by a Compounding

Taxable Dealer U/s 8. [Section 20(2)(b)]

Non-furnishing of Returns for continuous period of 6 months for dealers other than

Composition Dealers. [Section 20(2)(c)]

Non commencement of business by the voluntary tax payer within the stipulated

time period (6 months) prescribed under the GST laws. [Section 21(2)(d)]

In case of surrender, the system will send an acknowledgment by SMS and e-Mail to the

applicant regarding his surrender of registration and he will be deemed to be unregistered


from the date of such acknowledgement. There will be a provision in the system to prompt

such surrendered registrants to update their address and mobile number at a prescribed

periodicity till all dues are cleared/refunds made.

The cancellation of registration may be done by tax authorities in the following situations:

In case signed copy of the summary extract of submitted application form is not

received even after a reminder;

In case a tax payer contravenes specified provision of the GST law

In case a taxpayer has not filed any return at all during a predetermined period

(say six months). In case a taxpayer has filed a nil return continuously for this

period, then the provisions of cancellation will not be applicable.

The cancellation of registration may be preceded by system generated notice

giving 7 days‟ time for furnishing reply by the taxpayer. Principle of natural justice

to be followed before cancellation, i.e., giving an opportunity to taxpayer to be

heard and passing of order.

If the taxpayer approaches the tax authority for revocation of surrendered or cancelled

registration, the surrendered / cancelled registration can be revoked. The action for

revocation would be initiated by that Authority which has cancelled the registration or had

earlier accepted the surrender of registration. The action for revocation / cancellation of

registration would have to be initiated by both Centre and State tax authorities. Once the

registration is cancelled by one authority it would be deemed to be cancelled by other

authority also. The cancellation or surrender of registration would always have

prospective effect.

13. CONSEQUENCES FOR NON-REGISTRATION

Non-Registration of a business might have following consequences:


Penalty of Rs. 10,000/- (Section 66(1)(x))

Non eligible for Input Tax Credit (Section (Section 16(2)

Non eligible for issue of Tax Invoice (Section 23)

Non eligible for Transfer of Input Tax Credit (Section 37A)

Detention of Goods & Conveyance (Section 69)

Confiscation of Goods (Section 70)

Confiscation of Conveyances (Section 71)

14. SOURCE OF THIS ARTICLE

Report of the Joint Committee on Business Process for GST on GST

Registration (July’15)

PPT on Proposed Registration Process (Oct’15)

Model Law GST

15. DISCLAIMER

This document is for information only. All care has been taken for laws

but in case something has been missed request our readers to update

us. This should not be taken as any advice from our concern. We shall

not be liable for any loss if occurred for laws stated in this document.

Thanks & Regards Team GSTpanacea.com 7503031378

[email protected]

Model Law GSTgstpanacea.com/.../Registration-Process-under-GST-regime.pdf · 2016-09-07 · regist...

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