When and Why is GST Registration required in different States?

Different type of Businesses that are required to register for GST in different states: 

To begin with the discussion let’s clear that there are no businesses that are required to mandatorily register in another state for GST except one i.e. in case of OIDAR, which we will discuss later in this topic.

As per the provisions of section 22 of the CGST Act, every supplier shall be required to registered in the state from where it makes taxable supplies of goods or services or both if his aggregate turnover in a financial year exceeds twenty lakh rupees.

So, the requirement for registration arises from the provisions of section 22 of the act, which says if any taxable supplies of goods or services is made from a state then registration is required in that state only.

Cases where GST Registration is mandatory

Following are the cases where mandatorily registration under GST as per section 24 of the CGST Act is required:

1. persons making any inter-State taxable supply;
2. casual taxable persons making taxable supply;
3. persons who are required to pay tax under reverse charge;
4. person who are required to pay tax under sub-section (5) of section 9;
5. non-resident taxable persons making taxable supply;
6. persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
7. persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;
8. Input Service Distributor, whether or not separately registered under this Act;
9. 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;
10. every electronic commerce operator;
11. 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
12. such other person or class of persons as may be notified by the Government on the recommendations of the Council.

The above are the cases where registration is mandatorily required under GST irrespective of the fact that whether aggregate turnover exceeds 20 lakhs or not.

• From the above facts, generally, registration requirement arises in the state from where Outward supplies are made and not in the state where supplies (INWARD SUPPLIES) are received.
• 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
• Further, the need to take registration is based upon the fact that “from where supply is made”, we can say that the “place of business” or “location of supplier” is the place from where a business is carried out.

Place of business means:

1. a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
2. a place where a taxable person maintains his books of account; or
3. a place where a taxable person is engaged in business through an agent, by whatever name called;

Location of Supplier of Services means:

1. where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
2. where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
3. where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and
4. in absence of such places, the location of the usual place of residence of the supplier;

Example to Explain when GST Registration is required in different states

• To understand the meaning of Place of business and registration requirements based on such criteria, lets take an example of a Real Estate
• A Real Estate company having its Corporate office in Delhi only and their business is to provide the Buildings on Rent / Lease. The company has buildings in 10 different states other than Delhi. Now the Question is whether he is required to registered in all the 10 states and the Delhi State or only registration in Delhi state where the company has its corporate office is located will serve the purpose legally and lawfully.
• Now if we interpret the provision of section 22 of the CGST Act, a person is required to registered in the state from where he supplies taxable goods or services or both. And to understand the registration requirement in case of the above example, we need to understand that from where the company is providing taxable supplies of Services of Rent / Lease.
• The Place of business as defined above includes a place from where a business is carried out and location of supplier includes a place of fixed establishment in cases where registration is not taken in a particular state.
• Now the combined reading of the above facts concludes that in case of a company in our example, is supplying services from each of the state where they have buildings which are provided on rent / lease and supply of service is provided from these places in the states. Thus, the registration in each state is required as per the provisions of the act

These types of cases are creating problems in the Industry also, as the compliance level of the tax payers is increased in these situations.

One should have to consider the above definitions and understanding to determine the registration requirement under GST.

• Further, there are some specific situations where businesses do face problem while availing ITC i.e. INPUT TAX CREDIT on Inward supplies.
• To elaborate further, let’s take an example where a company is registered in Delhi only. Now the employee of the company visits in Maharashtra and stays in a hotel there. The GST charged by the supplier (i.e. the Hotel) is CGST + SGST of Maharashtra.
• Now as per the provisions of Input Tax Credit Rules, ITC of Maharashtra is not available to the company registered in Delhi
• Now, if the company wants to avail the ITC of the part which is not available due to the provisions of the ITC rules, the company is required to take the registration in Maharashtra. However, if the company does not have ay taxable supplies in Maharashtra, then taking the registration is not the solution for the blocked ITC. The same problem can be solved by taking registration as an Input Service Distributor.
• However, the law does not mandate to take registration to save that blocked ITC, it totally depends up on business to business.

Solution: Virtual Office for GST Registration

But If you want to avail the blocked Input Tax Credit, you can take GST Registration of that state, and avail Input tax credit on all purchases and expenses done in that state by the business.

To avail GST Registration in that state, a business must have an office address to register for GST as a proof of address of that state. If you already have an office space in that state, you can easily register on that address, but if you don’t, then you will have to own/rent a, office space.

This is where Virtual Office for GST Registration Plan can help you in getting cost effective solution for just INR 1000/month, which provides solution in professional business centres & Co-working Spaces.

The documents provided for GST Registration are Owner NOC, Rent Agreement, and Electricity Bill.

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