Definitions of Fixed establishment, Place of Business and Principal place of business

GST update 26.01.2017 Definitions of Fixed establishment, Place of Business and Principal place of business

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Definitions of Fixed establishment, Place of Business and Principal place of business

Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:-
The revised draft law provides for 3 different definitions which are reproduced here for ready reference.

2(46): Fixed establishment: the definition reads as follows:
Fixed establishment means a place (other than the place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;

2(75): Place of Business: the definition reads as follows:
Place of Business includes
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, provides or receives goods and/or services; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by

2(77) Principal place of business:
Principal place of business means the place of business specified as the principal place of business in the certificate of registration;

It can be noted that there are 3 kinds of definitions given in the revised draft law relating to premises. Now on reading of the definitions simultaneously, it comes to notice that fixed establishment and place of business have been segregated by excluding place of business from the definition of fixed establishment.

Even if we study the definition of "principal place of business" in revised GST law and old GST law then it is clearly brought out that there was requirement of keeping books of accounts at principal place of business in old GST law but now the same requirement is dispensed with in new revised GST law. Even we have brought out the same in our earlier GST update. The books of accounts are to be maintained at "place of business".

But when we study further in revised GST law, the only place where the term “principal place of business” occurs is in section 53 which pertains to accounts and records. It states that Every registered taxable person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration a true and correct account of production or manufacture of goods, of inward or outward supply of goods and/or services, of stock of goods, of input tax credit availed, of output tax payable and paid, and such other particulars as may be prescribed in this behalf. Hence, the requirement of keeping of books of accounts at principal place of business is deleted from main definition but the same is included in Section 53.

If the books of accounts are also to be kept at Principal place of business as well as place of business also, then it can be noted that no specific demarcation is there definitions which differentiates it from each other.

This is in contradiction of the definition of place of business and principal place of business and both require a taxable person to maintain his books of accounts at this place. Thus it seems that there was no need to provide a definition for principal place of business. The other two definitions would have sufficed its purpose.

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GST update 26.01.2017 Definitions of Fixed establishment, Place of Business and Principal place of business

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