GST Update on Concept of Casual Taxable Person and provisions relating thereto under GST

The new law has come up with a number of new concepts and new terminology. One of such is the concept of “casual taxable person”. “Casual taxable person” has been defined under section 2(20) of CGST Act, 2017 as 'One 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'.

Thus, the essential elements for being a casual taxable person are:
• Nature of transactions in a state or union territory is occasional.
• He has a fixed place of business in other state or union territory.

Facts of each case will determine whether or not it would be a case of an inter-state supply or one falling in the category of supply by a casual taxable person.
For example- (1) A shopkeeper who has a showroom in Delhi but participates in an exhibition-cum-sale in another city would fall under casual taxable person. However, if he sends the consignment from his Delhi store, then it would be an inter-state sale.
(2) If a music band based in Mumbai and are performing a stage program in Jaipur (where they don't have a fixed place of business), then irrespective of their turnover, they will have to register under Goods and Services Tax (GST) in the state of Rajasthan.
Summary of provisions relating to casual taxable person under CGST Act 2017:
• Registration of such persons is covered under Section 24 of CGST Act 2017 which deals with Compulsory registration in certain cases. So, casual taxable persons making taxable supply would require registration even if their turnover is below exemption limit of 20 Lakh (Rs 10 Lakh in NE states). Further as per provisio to Section 25(1) of the Act, Casual taxable persons will have to get themselves registered five days prior to the commencement of business (or in other words, before entering into the transaction for supply of goods or services).
• As per Section 27(1) of the said Act the registration certificate so issued shall be valid for the period specified in the application for registration or 90 days from the effective date of registration, whichever is earlier and such person shall make taxable supplies only after the issuance of the certificate of registration.
• As per Section 27(2) such person shall have to make an advance deposit of tax in an amount equivalent to the estimated tax liability for the period for which the registration is sought. This provision is making it very difficult. Nobody will deposit the tax in advance.
• As per Section 54(13) of the said Act the amount of advance tax deposited by a casual taxable person under Section 27(2), shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under Section 39.This mean the deposit will not adjusted with tax liability. You will pay the tax again and take the refund of deposit made by you. This is very impractical approach for such taxpayers.
• Since casual taxable persons are excluded from purview of Section 44 of the said Act hence they are not required to file an annual return for every financial year.

In the end, these provisions of taxable person seem very difficult to implement. No prudent person will deposit tax in advance then pay tax again and file return. Lastly, he has to get the refund from the department. On the contrary, he will take a room on rent, register himself in that state. He will file returns and then surrender his registration. Although following this route will also have challenges but it will be practical solution to complicated casual taxable person provisions.
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GST Update on Concept of Casual Taxable Person and provisions relating thereto under GST

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