Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

GST UPDATE ON REQUIREMENT OF REGISTRATION BY ASSESSEES EXCLUSIVELY SUPPLYING EXEMPTED GOODS

GST UPDATE ON REQUIREMENT OF REGISTRATION BY ASSESSEES EXCLUSIVELY SUPPLYING EXEMPTED GOODS
GST UPDATE ON REQUIREMENT OF REGISTRATION BY ASSESSEES EXCLUSIVELY SUPPLYING EXEMPTED GOODS:-
 
Maharashtra Authority for Advance Ruling in the case of M/s Jalaram Feeds has ruled that an assessee exclusively engaged in supply of exempted goods is required to take registration under section 24 of the CGST Act, 2017 if the said assessee is required to pay tax under reverse charge. It has been concluded that the contention of the assessee that the provisions of section 24 override section 22(1) and not section 23 is not proper as it would lead to non-payment of tax on GTA services under reverse charge mechanism by both GTA and the assessee which is not intended by the Law. It has been held that the section 23 is not a standalone section as stated by the assessee and rather the provisions of section 23 compliment the provisions contained in section 22 of the CGST Act, 2017. It is held that the according to the provisions of section 22 of the CGST Act, 2017, a supplier making taxable supplies of goods or services is liable to get registered if his aggregate turnover in a financial year exceeds twenty lakhs rupees and the reference of term ‘taxable supplies’ indicates that a person exclusively supplying exempted goods or services is not liable to get registered. It is concluded that since a person exclusively engaged in supply of exempted goods or services is not liable to take registration even by referring to the provisions of section 22(1) of the CGST Act, 2017 without even referring to the provisions of section 23 of the CGST Act, 2017, the provisions of section 23 are in alignment with the provisions of section 22(1) of the CGST Act, 2017. Therefore, it was pronounced that an assessee exclusively engaged in supplying exempted goods would be liable to take registration if the assessee is liable to pay tax under reverse charge mechanism by referring to the provisions of section 24 of the CGST Act, 2017.
 
In this context, it is pertinent to refer to similar decision given by the AAR West Bengal in the case of Joint Plant Committee wherein it was concluded that the applicant will not be liable to get registered under GST Law if the applicant is exclusively engaged in supplying exempted goods or services subject to the condition that the applicant is not liable to pay GST under reverse charge as in such case, compulsory registration would be required as per section 24(iii) of the CGST Act, 2017. Hence, in nutshell, the benefit of section 23 of the CGST Act, 2017 is subject to the provision of section 24 of the CGST Act, 2017 pertaining to compulsory registration in certain cases.
 
Now, the question arises is that whether the decisions given in the above cited Advance Rulings are correct in interpreting that the provisions of section 24 of the CGST Act, 2017 have overriding effect on both section 22(1) and section 23 of the CGST Act, 2017? In order to better analyse the situation, it is pertinent to refer to the provisions of section 22(1), 23 and 24 of the CGST Act, 2017.
 
Section 22 Persons liable for registration
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:
 
Section 23 Persons not liable for registration
23. (1) The following persons shall not be liable to registration, namely:––
 
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
 
(b) an agriculturist, to the extent of supply of produce out of cultivation of land. 
(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.
 
Section 24 Compulsory registration in certain cases
24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––
 
(i) persons making any inter-State taxable supply;
 
(ii) casual taxable persons making taxable supply;
 
(iii) persons who are required to pay tax under reverse charge;
(iv) ................
On perusal of the above cited provisions, it is observed that section 22 and section 23 mutually exclusive sections as they pertain to totally opposite issues. Section 22 pertains to persons liable for registration while section 23 pertains to persons not liable for registration. Furthermore, section 24 pertains to compulsory registration in certain cases starting with ‘Non-obstante’ clause making reference of section 22(1) pertaining to persons liable for registration. Hence, we may infer that the provisions of section 24 describe the situation wherein compulsory registration is required even if the aggregate turnover of person supplying taxable goods or services does not exceed Rs. 20 Lakhs. It cannot be inferred that the section 24 lists out situation wherein person is liable to take registration even if there is no taxable supply of goods or services because it does not override the provisions of section 23 of the CGST Act, 2017. The interpretation taken by the learned AAR Maharashtra that the provisions of section 23 are merely expansion of the provision contained in section 22 and the provisions of section 24 are applicable for both does not appear to be correct in our opinion. If the interpretation taken by the learned AAR Maharashtra is observed, it will render the provisions contained in section 23 as otiose. Such an interpretation will make the provisions contained in section 24 as supreme and the exemption granted under section 23 as redundant as practically GTA service is usually availed by every business, be it exclusively exempted business. Moreover, section 22 and section 23 are diagonally opposite sections and when it is clearly stated in section 23 that the person exclusively engaged in supply of exempted goods or services is not liable to get registered, the said person cannot be compelled to take registration by application of provisions contained in section 24 as section 23 is specific section stating persons not liable to take registration and the specific provisions prevail over general provisions. In our opinion, the conclusion arrived by AAR requires re-consideration. GST UPDATE ON REQUIREMENT OF REGISTRATION BY ASSESSEES EXCLUSIVELY SUPPLYING EXEMPTED GOODS:-
 
Maharashtra Authority for Advance Ruling in the case of M/s Jalaram Feeds has ruled that an assessee exclusively engaged in supply of exempted goods is required to take registration under section 24 of the CGST Act, 2017 if the said assessee is required to pay tax under reverse charge. It has been concluded that the contention of the assessee that the provisions of section 24 override section 22(1) and not section 23 is not proper as it would lead to non-payment of tax on GTA services under reverse charge mechanism by both GTA and the assessee which is not intended by the Law. It has been held that the section 23 is not a standalone section as stated by the assessee and rather the provisions of section 23 compliment the provisions contained in section 22 of the CGST Act, 2017. It is held that the according to the provisions of section 22 of the CGST Act, 2017, a supplier making taxable supplies of goods or services is liable to get registered if his aggregate turnover in a financial year exceeds twenty lakhs rupees and the reference of term ‘taxable supplies’ indicates that a person exclusively supplying exempted goods or services is not liable to get registered. It is concluded that since a person exclusively engaged in supply of exempted goods or services is not liable to take registration even by referring to the provisions of section 22(1) of the CGST Act, 2017 without even referring to the provisions of section 23 of the CGST Act, 2017, the provisions of section 23 are in alignment with the provisions of section 22(1) of the CGST Act, 2017. Therefore, it was pronounced that an assessee exclusively engaged in supplying exempted goods would be liable to take registration if the assessee is liable to pay tax under reverse charge mechanism by referring to the provisions of section 24 of the CGST Act, 2017.
 
In this context, it is pertinent to refer to similar decision given by the AAR West Bengal in the case of Joint Plant Committee wherein it was concluded that the applicant will not be liable to get registered under GST Law if the applicant is exclusively engaged in supplying exempted goods or services subject to the condition that the applicant is not liable to pay GST under reverse charge as in such case, compulsory registration would be required as per section 24(iii) of the CGST Act, 2017. Hence, in nutshell, the benefit of section 23 of the CGST Act, 2017 is subject to the provision of section 24 of the CGST Act, 2017 pertaining to compulsory registration in certain cases.
 
Now, the question arises is that whether the decisions given in the above cited Advance Rulings are correct in interpreting that the provisions of section 24 of the CGST Act, 2017 have overriding effect on both section 22(1) and section 23 of the CGST Act, 2017? In order to better analyse the situation, it is pertinent to refer to the provisions of section 22(1), 23 and 24 of the CGST Act, 2017.
 
Section 22 Persons liable for registration
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:
 
Section 23 Persons not liable for registration
23. (1) The following persons shall not be liable to registration, namely:––
 
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
 
(b) an agriculturist, to the extent of supply of produce out of cultivation of land. 
(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.
 
Section 24 Compulsory registration in certain cases
24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––
 
(i) persons making any inter-State taxable supply;
 
(ii) casual taxable persons making taxable supply;
 
(iii) persons who are required to pay tax under reverse charge;
(iv) ................
On perusal of the above cited provisions, it is observed that section 22 and section 23 mutually exclusive sections as they pertain to totally opposite issues. Section 22 pertains to persons liable for registration while section 23 pertains to persons not liable for registration. Furthermore, section 24 pertains to compulsory registration in certain cases starting with ‘Non-obstante’ clause making reference of section 22(1) pertaining to persons liable for registration. Hence, we may infer that the provisions of section 24 describe the situation wherein compulsory registration is required even if the aggregate turnover of person supplying taxable goods or services does not exceed Rs. 20 Lakhs. It cannot be inferred that the section 24 lists out situation wherein person is liable to take registration even if there is no taxable supply of goods or services because it does not override the provisions of section 23 of the CGST Act, 2017. The interpretation taken by the learned AAR Maharashtra that the provisions of section 23 are merely expansion of the provision contained in section 22 and the provisions of section 24 are applicable for both does not appear to be correct in our opinion. If the interpretation taken by the learned AAR Maharashtra is observed, it will render the provisions contained in section 23 as otiose. Such an interpretation will make the provisions contained in section 24 as supreme and the exemption granted under section 23 as redundant as practically GTA service is usually availed by every business, be it exclusively exempted business. Moreover, section 22 and section 23 are diagonally opposite sections and when it is clearly stated in section 23 that the person exclusively engaged in supply of exempted goods or services is not liable to get registered, the said person cannot be compelled to take registration by application of provisions contained in section 24 as section 23 is specific section stating persons not liable to take registration and the specific provisions prevail over general provisions. In our opinion, the conclusion arrived by AAR requires re-consideration. GST UPDATE ON REQUIREMENT OF REGISTRATION BY ASSESSEES EXCLUSIVELY SUPPLYING EXEMPTED GOODS:-
 
Maharashtra Authority for Advance Ruling in the case of M/s Jalaram Feeds has ruled that an assessee exclusively engaged in supply of exempted goods is required to take registration under section 24 of the CGST Act, 2017 if the said assessee is required to pay tax under reverse charge. It has been concluded that the contention of the assessee that the provisions of section 24 override section 22(1) and not section 23 is not proper as it would lead to non-payment of tax on GTA services under reverse charge mechanism by both GTA and the assessee which is not intended by the Law. It has been held that the section 23 is not a standalone section as stated by the assessee and rather the provisions of section 23 compliment the provisions contained in section 22 of the CGST Act, 2017. It is held that the according to the provisions of section 22 of the CGST Act, 2017, a supplier making taxable supplies of goods or services is liable to get registered if his aggregate turnover in a financial year exceeds twenty lakhs rupees and the reference of term ‘taxable supplies’ indicates that a person exclusively supplying exempted goods or services is not liable to get registered. It is concluded that since a person exclusively engaged in supply of exempted goods or services is not liable to take registration even by referring to the provisions of section 22(1) of the CGST Act, 2017 without even referring to the provisions of section 23 of the CGST Act, 2017, the provisions of section 23 are in alignment with the provisions of section 22(1) of the CGST Act, 2017. Therefore, it was pronounced that an assessee exclusively engaged in supplying exempted goods would be liable to take registration if the assessee is liable to pay tax under reverse charge mechanism by referring to the provisions of section 24 of the CGST Act, 2017.
 
In this context, it is pertinent to refer to similar decision given by the AAR West Bengal in the case of Joint Plant Committee wherein it was concluded that the applicant will not be liable to get registered under GST Law if the applicant is exclusively engaged in supplying exempted goods or services subject to the condition that the applicant is not liable to pay GST under reverse charge as in such case, compulsory registration would be required as per section 24(iii) of the CGST Act, 2017. Hence, in nutshell, the benefit of section 23 of the CGST Act, 2017 is subject to the provision of section 24 of the CGST Act, 2017 pertaining to compulsory registration in certain cases.
 
Now, the question arises is that whether the decisions given in the above cited Advance Rulings are correct in interpreting that the provisions of section 24 of the CGST Act, 2017 have overriding effect on both section 22(1) and section 23 of the CGST Act, 2017? In order to better analyse the situation, it is pertinent to refer to the provisions of section 22(1), 23 and 24 of the CGST Act, 2017.
 
Section 22 Persons liable for registration
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:
 
Section 23 Persons not liable for registration
23. (1) The following persons shall not be liable to registration, namely:––
 
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
 
(b) an agriculturist, to the extent of supply of produce out of cultivation of land. 
(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.
 
Section 24 Compulsory registration in certain cases
24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––
 
(i) persons making any inter-State taxable supply;
 
(ii) casual taxable persons making taxable supply;
 
(iii) persons who are required to pay tax under reverse charge;
(iv) ................
On perusal of the above cited provisions, it is observed that section 22 and section 23 mutually exclusive sections as they pertain to totally opposite issues. Section 22 pertains to persons liable for registration while section 23 pertains to persons not liable for registration. Furthermore, section 24 pertains to compulsory registration in certain cases starting with ‘Non-obstante’ clause making reference of section 22(1) pertaining to persons liable for registration. Hence, we may infer that the provisions of section 24 describe the situation wherein compulsory registration is required even if the aggregate turnover of person supplying taxable goods or services does not exceed Rs. 20 Lakhs. It cannot be inferred that the section 24 lists out situation wherein person is liable to take registration even if there is no taxable supply of goods or services because it does not override the provisions of section 23 of the CGST Act, 2017. The interpretation taken by the learned AAR Maharashtra that the provisions of section 23 are merely expansion of the provision contained in section 22 and the provisions of section 24 are applicable for both does not appear to be correct in our opinion. If the interpretation taken by the learned AAR Maharashtra is observed, it will render the provisions contained in section 23 as otiose. Such an interpretation will make the provisions contained in section 24 as supreme and the exemption granted under section 23 as redundant as practically GTA service is usually availed by every business, be it exclusively exempted business. Moreover, section 22 and section 23 are diagonally opposite sections and when it is clearly stated in section 23 that the person exclusively engaged in supply of exempted goods or services is not liable to get registered, the said person cannot be compelled to take registration by application of provisions contained in section 24 as section 23 is specific section stating persons not liable to take registration and the specific provisions prevail over general provisions. In our opinion, the conclusion arrived by AAR requires re-consideration. 
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com