GST INDIA : THRESHOLD LIMIT OF TURNOVER

Friends !

              Sub-clause (d) of clause (4) of article 279A of the Constitution of India runs as follows:

The Goods and Services Tax Council shall make recommendations to the Union and the States on the threshold limit of turnover below which goods and services may be exempted from goods and services tax;

(4) माल और सेवा कर परिषद् निम्नलिखित के सम्बन्ध में संघ और राज्यों को शिफारिश करेगी --

(घ) आवर्त की वह अवसीमा जिसके नीचे माल और सेवाओं को माल और सेवा कर से छूट प्रदान की जा सकेगी ;

                Sub-section (1) and (2) of section 22 of the Central Goods and Services Tax Act, 2017 / State Goods and Services Tax Law, and section 24 of the said laws run as follows:

22. (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.

(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.

24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––

(i) persons making any inter-State taxable supply;

(ii) casual taxable persons making taxable supply;

(iii) persons who are required to pay tax under reverse charge;

(iv) person who are required to pay tax under sub-section (5) of section 9;

(v) non-resident taxable persons making taxable supply;

(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52;

(x) every electronic commerce operator;

(xi) every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations of the Council.

            Here I will like to emphasize on the word "threshold" used in the Constitution. Hindi meanings of the word threshold are : देहलीज, देहरी (मकान या कमरे के प्रवेश द्वार पर लगी चौखट का निचला भाग). In English its meanings are doorsill or doorway. Therefore, limit of turnover expected in the Constitution should have been of threshold (ddorway / doorsill  देहलीज) nature. All persons having turnover below such limit should have been outside the goods and services tax. Here we see limit of turnover of 10 or 20 lakh rupees does not satisfy this condition. In sub-section (2) of section 22, as also persons mentioned in section 24 have been made liable even if their annual turnover will be lower than 10 or 20 lakhs.

       In these circumstances, I am of the view that --  

(i) If the limit of turnover, of 10 or 20 lakh rupees given in section 22(1) of  CGST / SGST Act, is the threshold limit of turnover as expected in clause (4) (d) of Article 279A of the Constitution, then certain provisions of section 24 are contrary to expectation of the Constitution; and

(ii) If the limit of turnover, of 10 or 20 lakh rupees given in section 22(1) of  CGST / SGST Act, is not the threshold limit of turnover as expected in clause (4) (d) of Article 279A of the Constitution, then limit of turnover given is in violation of clause (4)(d) of Article 279A of the Constitution.