Analysis
— Every supplier shall be liable to be registered under the Act in the State from which he makes a taxable supply of Goods or Services or both. It is important to note that registration is required ‘in’ the State ‘from which’ taxable supplies are made.
Registration is not required ‘in’ the State ‘to’ which taxable supplies are made, even though this is a destination-based tax. This greatly reduces the burden of the taxable person from having to seek registration in every State ‘to’ which taxable supplies are made. If the supplies are ‘to’ another State, then the nature of tax will not be CGSTSGST but IGST and is paid to the Centre who will ensure that the same reaches the appropriate ‘destination’ State. Therefore, for purposes of obtaining registration, it is important to identify the ‘origin’ of supply even though GST is a ‘destination’ based tax. Tax goes to the destination-State but registration is in the origin-State. Place of Supply (as determined from IGST Act) provides the ‘destination’ and this is not relevant for registration. The Location of Supplier is relevant for registration.
The State “from” where taxable supply is made is a question of fact and that must be determined based on the requirement of law. In the case of services, Location of Supplier of Services is defined in 2(71) of CGST Act but in the case of goods, Location of Supplier of Goods is not defined. And this is not an oversight but deliberate. Services leave no trail as to the location ‘from’ where they are supplied and for that reason, a definition is required. Whereas goods leave a trail, that is, where the goods are actually ‘located’. This can be seen from the definition of Place of Business 2(85) of CGST Act. Place of Business is where business is ‘ordinarily carried on’ – this would be the location ‘from’ where taxable supplies are made, whether for goods or for services. But, if this is not (in case of goods), this definition goes on to include ‘place where goods are stored’. Hence, location of supplier of goods is where business is ordinarily carried on or where the goods themselves are located, if that were more accurate. For example, a company incorporated outside India purchases goods from a manufacturer and instructs that the goods be deposited with a warehouse-keeper in India. And then after some time, supplies the goods from the warehouse to a customer also within India. By being incorporated outside India, the place where business is ordinarily carried on is not in India but the location where goods are stored being within India, attracts the requirement to register at the warehouse. It is true that mere storage is not the ‘place of business’ in general understanding but in GST this appears to the unequivocal intent of the law-maker. Care should be taken to correctly identify where registration ought to be obtained so as not to end up with a serious misapplication of the requirements of law.
Registration is required if his aggregate turnover in a financial year exceeds Rupees Twenty Lakhs. This threshold limit will be Rupees Ten Lakhs if a taxable person conducts his business in any of the special category states as specified in sub-clause (g) of clause (4) of Article 279A of the Constitution i.e. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. However, the threshold limit remains Rupees Twenty Lakhs for the State of Jammu and Kashmir.