This article has been edited by Mansi Bathija and written by Lakshay Kumar, a second-year B.A.LLB student of Delhi Metropolitan Education, Indraprastha University. In this article, he talks about the rules regarding registration. Refunds and Returns under Goods and Services Tax.
The indirect tax system in India is extremely complex. It has long been felt that the complexity of tax structure and the general legal framework dampen entrepreneurship and hinders the growth of businesses. India, in spite of being a single country, faces internal barriers to interstate trade, commerce, and business because of the prevailing multiplicity of tax structures. While the implementation of VAT helped in ironing out major tax rate differences yet the need for structural reforms continued to be felt. VAT implementation also helped in preparing the groundwork that is essential for bringing out the next level of tax reforms viz. the Goods and Services Tax (“GST”). In this article, we will focus on the compliances and procedure required to register under GST, claiming refunds and filing returns of tax paid.
Registration Rules Under Goods and Services Tax
Persons who have to Register
Before understanding the concept of registration it is necessary that we must know who is liable to register under the Goods and Services Tax. Provisions regarding Registration are contained in Section 22 to Section 30 of the Central Gst Act, 2017.
According to Section 22 of the Act the following category of people have to register themselves under the Goods and Services Act.
- Every supplier who has an annual turnover of rupees twenty lakhs have to register themselves under the Goods and Services Act, 2017.
- In the case of a special category state severy supplier who has an annual turnover of rupees ten lakhs have to register themselves under the Gst Act.
- All the persons who were previously enrolled under different laws prior to the commencement of this act also have to get themselves registered.
- Any person who has taken over the business from the other person of the registered company also have to get themselves registered under this act.
- Section 22 clause 4 of the act says that in case the transfer of the company is pursuant to the sanction of the scheme, or it is related to the combining two or more companies or their is any demerger of a company or the orders of any High Court or any Tribunal, in that case the Transferee shall have to get himself registered under the GST Act.
Persons who do not have to register
The Central Government has also given exemptions under Section 23 of the act to some category of people who do not have to get themselves registered namely:
- Any person who is involved in the supply of Goods and Services or both, and is exempted by law for not paying tax do not have to get themselves registered under the Goods and Services Act, 2017.
- Any agriculturist who is involved in the supply of the product which does not involve the cultivation of land.
- The government on the advice of the council from time to time through notices may specify the category of persons who may be exempted from getting themselves registered.
According to Section 24 of the Goods and Services Act, 2017 there is a certain category of people who have to get himself or herself registered, registration for them is compulsory, all these categories are mentioned below:
- Any person who is making an inter-state taxable supply is required to get himself registered.
- A casual taxable person making a taxable supply.
- Persons who are required to pay taxes under reverse charges.
- The non-resident taxable person making a taxable supply.
- Persons who make taxable supply of goods and services for other taxable people as an agent or otherwise are also required to get themselves registered.
- Input Service Distributor whether or not separately registered under this act or not.
- Every electronic commerce operator and every person who is supplying online information from outside India to any person living in India.
- Any other person who is notified by the government on the recommendations of the Gst Council.
Procedure for Registration
Section 25 of the Goods and Services Act, 2017 mentions the various provisions regarding the procedure of registration, some of the important provisions are mentioned below:
- Every person who is liable to get himself registered under Section 22 and Section 24 has thirty days time to get himself registered from the date he becomes liable to registration. In the case of a casual taxable person or non-resident taxable person, the time for registration is five days from the date of the commencement of their business.
- A person would be granted single registration in a state or union territory, if a person has a different business in a single state or union territory then, in that case, he or she could be granted special registration subject to a certain condition as may be applied.
- Persons who are not required to get themselves registered can also get themselves registered voluntarily and all the provisions of the act shall apply to these persons.
- Persons who have obtained or required to obtain registration for an establishment in a union territory or a state and have a registration in the state or union territory then, then such registration would be treated as a distinct registration from the other registration.
- Another important requirement for the grant of registration is that every person must link their Permanent Account Number with the Income Tax Act, 1961 in order to be eligible for the grant of registration.
- If a person who is required to get himself registered fails to do that, a proper officer may take any action as may be prescribed under the Act, or may take action under any other law as may be acceptable.
- Apart from the category of people who fall under subclause 1 of Section 25, the Government may grant a Unique Identity Number, this Unique Identity Number may be granted to any specialized agency of the United Nations Organisations or any other consulate or embassy of the foreign country.
Section 26 of the Central Goods and Services Act, 2017 mentions situations when a grant for registration would be deemed to have been given.
According to Section 26 subclause 1 of the act if any person has obtained registration under the States Goods and Services Act, 2017, or under Union Territory Goods and Services Act, 2017, then in that case that registration would be deemed to have made registration under the Central Goods and Services Act, 2017.
Subclause 2 of Section 26 says that if any registration has been blocked under the State Goods and Services Act, 2017 or under Union Territory Goods and Services Act, 2017 then that rejection would be deemed to be rejected under this act also.
Amendment to Registration
According to Section 28 any person may inform the concerned officer to make some changes in the information presented to him at the time of registration or subsequent to it, through a proper procedure, the officer concerned shall have the power to either accept the changes or reject the changes but he can not reject the changes without giving the other person a chance to speak for himself.
Cancelation of Registration
Section 29 of the CGst Act, 2017 provides provisions regarding the cancelation of registrations some of the important points are highlighted below:
The officer in charge may at his own motion or through an application filed by the concerned person may cancel the registration as may be prescribed. However, the officer has to keep the following circumstances in mind :
- The business has been discontinued, transferred, amalgamated or demerged or disposed of as the situation may be.
- There has been a change in the constitution of the business.
- Or the taxable person is no longer liable to be registered under the act.
The officer can reject the application on the following grounds
- If the registered person has violated any of the provisions of the act as may be prescribed.
- A person who was supposed to pay tax has not filed his return for three consecutive periods.
- Any person who has voluntarily registered and has not started his business within six months from the date of registration.
- If the registration has been obtained by fraud, willful misstatement or any suppression of facts.
Certain important things to be kept in mind during the time of cancelation are that no cancelation shall happen before hearing the other side, second after cancelation the person concerned shall not be relieved of his liability to pay taxes due to him at the time of cancelation or after cancelation. The third cancelation of registration done under State Goods and Services Act, 2017 or Union Territory Goods and Services Act, 2017 shall be deemed to be cancelation under Central Goods and Service Act, 2017.
Revocation of Cancelation of Application
Section 30 of the act also gives a chance for revoking the application of cancelation either by the officer through his own motion or the concerned person may give notice for that effect to the officer within thirty days of the cancelation of the application.
The officer has the power to either accept the revocation application or reject it, but he can not reject it before giving a fair chance to the other person to speak.
Refund rules under Goods and Service Tax
Refund of Tax
- As far as a refund of tax is concerned Section 54 of the Central Goods and Services Tax provides provision regarding the refund of tax. According to Section 54, any person who has paid off the tax or any interest shall apply for a refund through an application within two years of the relevant date.
- Section 54 also says that any agency of the United Nation Organisation or any consulate of the embassy refund under inward supply of goods and services can claim a refund by filing an application for refund within six months from the last day of the quarter from which supply was received.
- Section 54 also mentions the list of documents which are required to be furnished with the application, the documents required are
- Any documentary evidence that may show that refund is due to the applicant.
- Any documentary evidence as the applicant may show that establishes that he is claiming a refund under the tax already paid or any interest on that already paid, and the incidence of such tax has not passed on to any other person.
Under Section 54 of the Central Goods and Services Act if any person claims refund, but has himself defaulted in furnishing any return then in that case the proper officer has the jurisdiction to either withhold the payment of such refund until the concerned person has paid off his due or filed his defaulted return or the officer may deduct the amount from refund to pay off any debt or penalty or return that was unpaid under this act or any such law.
Under Section 54 if the grant of refund is under an appeal or trial, and the commissioner thinks that granting the refund would affect the revenue in the said appeal or may cause fraud then the commissioner can withhold such refund as he may seem fit.
According to Section 55, the Government on the advice of the council may notify allowing any agency of the United Nations Organisation or any consulate of any embassy to claim a refund on the supply of goods or services or both.
According to Section 56 of the Goods and Services Act, 2017 if any refund which is to be refunded to any person is not given within 60 days then an interest not exceeding 6 percent shall be applicable on that interest from the date of the expiry of the refund period.
Consumer Welfare Fund and Utilisation
According to Section 57 of the Central Government Goods and Services Act, 2017 the Central Government is bound to establish a Welfare Fund that may include:
- Any income from the investment of the amount credited to the fund
- Any other money received by it.
Section 58 of the act the consumer welfare fund would be utilized for the welfare of the consumers.
The welfare fund is required to maintain an annual account statement of its fund in consultation with the Comptroller and Auditor General of India.
Return rules under Goods and Services Act
According to Section 37 of the Central Goods and Service Act, 2017 every supplier except the input service distributor or non resident taxable person or any person who has been exempted from paying the tax, shall have to furnish electronically returns of the outward supply of goods and services affected during the tax period on or before tenth of the month succeeding the said tax period, as per Section 37, no return filed after the said date would be accepted as a valid return although the commissioner may accept the return filed after the said period only circumstances as he may seem fit.
According to Section 38 any supplier apart from the exceptions have a chance to delete, modify or verify the details pertaining to the outward supplies apart from that the supplier also has to furnish the returns of the inward supplies electronically as may be prescribed on tenth and not before 15 of the month succeeding the tax period of the said period.
If any person has filed a return and some error has been discovered, then the person concerned must rectify the error in time and then file the revised return and pay the interest which may be applicable.
One thing to be noted here is that no error would be rectified for the month of September after the end of the fiscal year to which such detail pertains or before furnishing the annual return whichever is earlier.
According to Section 39, every registered person has to furnish the return for every calendar month of every input and outward supply of goods and services by twenty of the month succeeding the tax period.
Similarly, any person paying a return of inward supply of goods and services or both quarterly has to pay the return electronically within ten of the end of such month.
Section 39 also permits the registered user to pay off the return of which he has not paid.
According to Section 40 of the Central Goods and Services Act, 2017 if any person who has made any outward supply of goods and services from the date till he is liable to registration till the date on which registration has been granted shall declare in the first registration furnished by him.
According to Section 41, every registered person who has paid the return for the supply of goods and services shall be eligible for a credit on the input tax on a provisional basis to his electronic credit ledger.
Subsection 2 of Section 41 says that the input tax is eligible only on the payment of self-assessed output tax.
Matching, Reversal and reclaim of Input Tax Credit
According to Section 42 of the Act says that details of the inward supply furnished by the registered user will be matched for two things first with the outward supply furnished by the corresponding user and second with the integrated goods and services tax paid in respect to goods imported by him.
When the claims of credit of input tax have been matched with the outward supply and with the integrated goods and services tax paid in respect to goods imported by him then that claim of the input tax credit would be communicated to the registered user under a prescribed manner.
If some discrepancy under the claim of ITC if found would be communicated to the user and if the supplier is not able to clear the discrepancy then the amount of ITC would be added to the output tax liability of the registered user for the month in which such discrepancy was discovered.
Every registered person shall file the annual return electronically at the end of the financial year that is before thirty-first December. Every registered person who is required to get his accounts audited shall submit electronically the annual returns along with a copy of the audited account along with the value of supplies declared by them under the annual returns furnished by him.
Every registered person who is required to furnish the final return and whose registration has been canceled shall furnish the annual returns within three months of the date of cancelation or the order of cancelation.
Notice to Return Defaulters
If a registered person who was bound to file the return fails to file the return under the prescribed period then, in that case, a notice would be issued upon him to file his return within fifteen days in the prescribed manner and form.
Levy of late fee
Every person who fails to file his inward and outward supplies that were due to him on time shall pay a fine of min hundred rupees every day and if the default still persists then a maximum of five thousand rupees has to be paid.
The above article clearly shows how important it is to register under GST and after registration what all advantages a registered user can claim under the Goods and Services Act. sometimes it may be the case that instead of paying the requisite amount as the tax an individual ends up paying excess amount, under that situation the policy of refund under GST is present. Finally, every registered user to is registered has to file his return to the article also points out the various provisions as to how an individual can file a return and what are the penalties imposed if he is not able to file the return.