Friends!
Section 22, of the Central Goods
and Services Tax Act, 2017, is related to liability of registration. A person
becomes liable for payment of tax at that point of time at which he becomes
liable for registration. Sub-section (1) of section 22 runs as follows:
(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:
Provided that
where such person makes taxable supplies of goods or services or both from any
of the special category States, he shall be liable to be registered if his
aggregate turnover in a financial year exceeds ten lakh rupees.
If we look at the sub-section,
we find that no time and date or the date, with effect from which, a person
referred to in the sub-section shall be liable for registration, has been
provided in the sub-section. In absence of point of time (the date or time and
date), the person should be treated liable for registration with effect from
first day of the financial year. Although period of levy of tax has not been
provided in section 9 of the Act yet from language of sub-section (1) above, it
can be inferred that unit for tax levy is period of each financial year.
Before implementation of VAT in
Uttar Pradesh, tax was leviable, on turnover of sale or purchase of goods, under
the Uttar Pradesh Trade Tax Act, 1948. Sub-section (2) of section 3, which had
been related to levy of tax, had run as follows:
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(2)
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No dealer shall, except as otherwise provided in section 18, be
liable to tax under sub- section (1), if, during the assessment year, the
aggregate of his turnover of-
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(a)
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purchases of goods notified under section 3-D;
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(b)
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purchases liable to tax under any other provision of this Act;
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(c)
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sale of goods notified under section 3-D where such goods have
not been purchased within the State;
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(d)
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sales of all goods (except those notified under section 3-D),
whether such sale is made by the dealer directly or through his branch, depot
or agent inside the State, in the course of inter-state trade or commerce or
outside the State,
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is less than two lakh rupees in the case of manufacturers and
three lakh rupees in the case of other dealers, or such larger amount as the
State Government may, by notification in the Gazette, specify in that behalf
either in respect of all dealers in any goods or in respect of a particular
class of such dealers.
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In the above sub-section, date
from which a dealer was to be treated liable to tax was not provided. In such
circumstances, a dealer had been liable to pay tax on his turnover of whole
assessment year, irrespective of the date on which his turnover had qualified
the limit of turnover provided in the sub-section for tax liability.
Let us take another example of
the Delhi Sales Tax Act, 1975. Sub-section (1) and clause (i) of Sub-section
(2) of section 3 of the Act had run as follows:
(1)
Every dealer whose turnover during the year immediately preceding the
commencement of this Act exceeds the taxable quantum and every dealer who
at the commencement of this Act, is registered or is liable to any tax under
the Central Sales tax, Act, 1956 (74 of 1956), shall be liable to pay tax under
this Act on all sales effected by him on or after such commencement.
(2) Every dealer to whom
sub-section (1) does not apply, shall with effect from the date
immediately following the day on which his turnover calculated from
the commencement of any year first exceeds within such year the taxable
quantum, be liable to pay tax under this Act on all sales effected by him after
that day;
Here, in sub-clause (i) of sub-section (2) of section 3
of the said Delhi Sales Tax Act, 1975, date from which a dealer had been liable
to pay tax had been provided. Now section 40 of the CGST Act, 2017 requires
submission of " First return". This section runs as follows:
40. Every registered person who has made outward
supplies in the period between the date on which he became liable to
registration till the date on which registration has been granted shall declare
the same in the first return furnished by him after grant of registration.
Perusal of this
section shows that submission of First return requires the date on which a
person becomes liable to registration and details of supplies made on or after
such date till the date on which registration is granted to him.
MY QUEST IS: Whether sub-section (1) of section 22 of the CGST
Act, 2017 is incomplete and defective. Whether it requires amendment?
My answer is a big YES. The sub-section could have been drafted
properly as under:
(1) Subject to provisions
of section 23, every person, who carries on business of supply of goods or
services or both from any State, other than a special category State, or from
any Union Territory and whose aggregate turnover, of such supplies of goods or
services or both, in a financial year exceeds twenty lakh rupees, shall be
liable to be registered under this Act in such State or Union territory with
effect from the date immediately succeeding the date on which his aggregate
turnover, for the period commencing on first day of such financial year or
where a business has been started on any day after first day of the financial
year, for the period commencing on first day of business, and ending on the
date on which his turnover so exceeds for the first time in such financial year:
Provided that
a person, who carries on business of such supplies from any of the special
category States and whose aggregate turnover, of such supplies of goods or
services or both, in any financial year exceeds ten lakh rupees, shall be
liable to be registered in such State, with effect from the date immediately succeeding the date
on which his aggregate turnover, for the period commencing on first day of such
financial year or where a business has been started on any day after first day
of the financial year, for the period commencing on first day of business, and
ending on the date on which his turnover so exceeds for the first time in such
financial year.
IMPORTANT:
Section 22 also requires that provisions shall included to tell:
(i) Once a
person becomes liable for registration, till what time he will continue to be
so liable. I mean to say that after what time he will cease to be liable for
registration; and
(ii) After seizure
of liability of registration when such person will become again liable for
registration.
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