Sub-section (2) of section 22 of the CGST Act / SGST Act, relating to liability for registration, runs as follows:
"(2) Every person who, on the day immediately preceding the appointed day, is registered or holds a licence under an existing law, shall be liable to be registered under this Act with effect from the appointed day."
This sub-section makes all dealers, irrespective of their turnovers (even where turnover is less than 20 lakh or 10 lakh rupees, as may apply), liable for registration. Again sub-section (3) of section 139, which is a transitional provision, provides that those persons whose registrations are cancelled on the ground that those are not liable for registration in accordance with provisions of section 22 or section 24, shall be not liable for registration with effect from the appointed day. Therefore, registrations of persons covered under sub-section (2) of section 22 will not be cancelled. In VAT, limit of turnover for registration has been 5 lakh rupees and in Service Tax, it had been 10 lakh rupees. The result will be that persons, whose turnover would have been less than 20 lakh rupees, will also continue to be registered person under GST and liable for payment of GST.
Again, what will happen to those persons who would have been liable for registration under earlier acts but have not obtained registration or the persons who have applied for grant of registration and whose such applications, for grant of registration, are pending for disposal. Such persons should also have been made liable for registration with effect from the appointed day.
My quest is that whether provision in sub-section (2) relating to fixing of liability for registration is incomplete and contrary to provisions of sub-section (1) of section 22 of the Act.
My view is that provision is incomplete and contrary to provisions of sub-section (1) of section 22. The provision could have been validly drafted in following form:
"Assuming that this Act has been applicable since the beginning of the financial year preceding the financial year in which the actual date of commencement of this Act falls, a person, who has commenced business of supply of goods or services or both on any day before the appointed day and whose aggregate turnover, of his business related to supply of goods or services or both, for such preceding financial year or for any period before the appointed day of the financial year in which appointed day falls, has exceeded 20 lakh rupees (or 10 lakh rupees in cases of special category States), shall be liable for registration, with effect from the appointed day, in the State from where such person carries on business."
I will feel obliged if you please express your views.