SECTION 9- TAXABLE PERSON

GST Update 02.02.2016

GST DAILY DOSE OF UPDATION:-

SECTION 9- TAXABLE PERSON:-

It is proposed in section 9 of GST Act, 2016, meaning of taxable person is given as a person who is registered or is required to be registered under Schedule III of this Act for payment of tax. The sub-section (2) specifies that the Central Government or a State Government may, by notification, specify the category of persons who may be exempted from obtaining registration under this Act. The sub-section (3) states that the Central Government, a State Government or any local authority shall be regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions which may be exempted, by notification, by the Central or a State Government, on the recommendation of the Council. The sub-section (4) states that any person who provides services as an employee to his employer in the course of, or in relation to his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability, shall not be considered as taxable person.

It is pertinent to note that the defination of person given in section 2(50) includes government and so there was no need to specifically mention in sub-section (3) that the Central Government, State Government shall be regarded as taxable person. Moreover, the sub-section (4) clears the doubt as regards leviability of GST on services provided by employee to employer. It was discussed in our update dated 22.01.2016 wherein defination of service was discussed which merely stated that ‘anything other than goods is services’. It was pointed out by us that the defination of service applicable at present specifically excludes services provided by employee to employer within its ambit and whether the same situation would continue in the GST regime also. It is observed that the situation of non-levy of tax on services provided by employee to employer would continue in the proposed GST regime also as section 9 giving the meaning of taxable person excludes employer employee relationship from its ambit. This is appreciated as service tax should not be levied on the services provided by employee to employer. Moreover, the sub-section (4) also covers any other legal arrangement wherein there is relationship of employer employee thereby indicating that no GST would be leviable on the services provided by directors in lieu of which they receive only remuneration from the company. It is hoped that the proposed GST regime untangles the confusion as regards applicability of service tax on services of directors provided to their company.

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GST Update 02.02.2016

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