GST Registration: Complete Guide for Requirement of State Wise Registration

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Sometimes, a person obtains GST registration in a state where corporate office is situated. There may be situation that he gets the assignment in another state.

Specifically in construction industry it is generally happens that a person is registered in another state, and he receives a construction contract in a different state. Thus, question may arise whether such person is required to obtain GST registration in the state where contract is received or he can raise IGST invoice from the state, where business is already registered.

In this article we will study whether Assessee needs to obtain registration in multiple states, or he can do all GST compliances from a single state.

Legal Provisions:

Section 22(1) of the CGST Act’2017 states that 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.

On analysis of above provisions it can be said that registration is required ‘in’ the State ‘from which’ taxable supplies are made.

Therefore, for the 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 required in the origin-State.

The origin state can be determined on the basis of location of supplier.

How to determine location of supplier?

Provisions for determining location of supplier are given in section 2(71) of the CGST Act, 2017 which are given hereunder:

Section 2(71):

“location of the supplier of services” means, —

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) 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;

(c) 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

(d) in absence of such places, the location of the usual place of residence of the supplier”

According to Rule 2(71), location of supplier is usually where a supply is made from, a place mentioned as a principal place of business on the GST registration certificate.

If registration has not been obtained in the state where supply is ultimately provided/performed by the supplier, then clause (b), (c) and (d) would be applicable.

Clause (b) of Section 2(71) states that location of such fixed establishment would be the location of supplier. Definition of Fixed establishment is given in Section 2(50) of the CGST Act, 2017 which is given hereunder:

Section 2(50) means:

a place (other than the registered place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs.”

For a company to have a fixed establishment it should fulfil all the following conditions:

  • There should be Sufficient degree of permanence
  • There should be Suitable structure in terms of human and technical resources and
  • Supply has been made from a place other than registered place of business

On the basis of the Section 22 read with Section 2(71) and 2(50), it has been inferred that registration will be required if all the following conditions are fulfilled:

1. Provides taxable supply of goods or services;

2. Has a sufficient degree of permanence;

3. Suitable structure in terms of human and technical resources.

Therefore, if a person has a permanent structure like office, warehouse, store etc. along with human and technical resources in a particular state and taxable supply can be directly linked with permanent structure/human or technical resources then he will be compulsorily required to obtain GST registration that state even though he is already registered in another state.

Complete detail of section 2 can be accessed at https://taxinformation.cbic.gov.in/content-page/explore-act

Reference of Some AARs:

In the AAR of KONKAN RAILWAY CORPORATION [ORDER NO.02/ODISHA-AAR/2022-23 Dated: 24-10-2022] the authority of advance ruling has found that: –

  • The Applicant is required to maintain suitable structures in terms of human and technical resources with sufficient degree of permanence at the sites of East Coast Railway, Odisha to effect supply of desired services as per the terms and conditions of the work order
  • The Applicant through its expert belonging, therefore, is to supply the services at the site from the establishment as defined under section 2 (7) of the IGST Act.
  • The location of the supplier should, therefore, be in Odisha in terms of section 2 (15) of the IGST Act.

On the basis of above findings Authority ruled that we do not agree with the contention of the Applicant that the Location of Supplier is in state of Maharashtra not in Odisha.  Accordingly, Applicant is required to be registered under Odisha Goods and Services Tax Act, ‘2017 and Central Goods and Services Tax Act, 2017 in the state of Odisha for the works contract services to be provided to Mis East Coast Railway, Odisha.

Further, in the AAR of M/s T & D Electricals, [Advance Ruling No.  KAR ADRG 18/2020 dated 1-03-2020/ODISHA-AAR/2022-23 Dated: 24-10-2022] the applicant got the contract form M / s Shree Cement Ltd., Rajasthan for execution of the same at the location situated in Kalaburagi district of Karnataka State. The applicant was a registered person in Rajasthan and with this background had sought advance ruling to know that whether separate registration is required in Karnataka state.

In the instant case, authority observed that applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan.  The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business, as admitted by the applicant.   Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan.  Thus, there is no requirement for a separate registration in Karnataka for execution of the contract referred supra.

In aforementioned AAR, it was ruled that the applicant need not obtain a separate registration in Karnataka, to execute the project in Karnataka. However, they are at liberty to obtain the said registration, if they are able & intend to have a fixed establishment at the project site in Karnataka.

Conclusion:

On the basis of above discussion, it can be concluded that whether to take multiple registration or not depends upon various factors like Fixed Establishment, Provision of taxable supply, usual place of residence etc.

A person would not be required to obtain registration in another state, if he can substantiate that taxable supply is made by another registered state. Similarly, registration is not required if exempted supply is made from another state.


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