Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part IV]
Applicability and Non-Applicability of Registration Provision
This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.
Vivek Laddha, Manish Gupta, Pooja Patwari
FAQ 1. What is the background of proposed amendment in section 23?
Law Brothers’ View: At present, the law provides section 22 and section 24 of Applicability of Registration and section 23 for situation of Non Applicability of Registration.
Just to glimpse, the background of there provisions are given below:
| Section | Brief | Opening wordings of the provision |
| 22 | Applicability of registration under GST based on threshold of aggregate turnover | Every supplier shall be liable to be registered…….., if his aggregate turnover in a financial year exceeds twenty lakh rupees |
| 24 | Compulsory registration in certain cases | Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act |
| 24 | Persons not liable for registration in certain cases | The following persons shall not be liable to registration, namely:— |
Consider a situation
Where any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under GST is not liable for registration [Sec 23(1)(a)] and
On another hand, if such person receives the supplies notified under RCM becomes liable for registration [Section 24(iii)].
This type of oxymoron is actually defeating the intended purpose of relaxation to the person engaged in wholly exempt supply.
To cater this peculiar issue, proposed law states thateven though a person is liable u/s 22(1) or section 24 (various situation including liability of registration based on RCM), a person will not be required to registration if person is engaged in wholly exempt supply and other cases of section 23.
FAQ 2. An agriculturist is engaged in the supply of produce cultivated from land will be liable for registration where he obtains the GTA Services.
Law Brothers’ View: GTA services are already exempted where transportation services are provided by GTA w.r.t. the produce out of cultivation. So, it was already out of the RCM being exempted supply. Herein such cases, there was not an issue of thinking of the application of section 24.
But where the situation is covered u/s 23 and 24 both then application of the proposal comes into effect.
Welcome move!!
FAQ 3. An Advocate supplies legal services to a person (other than a business entity) through ECO (say, www.lawbrothers.com) and the aggregate turnover of such advocate exceeds the threshold limit during the F.Y. Both the supplier and recipient are located in same state.
- Whether the advocate is liable to registration?
- Whether the business entity is liable to registration?
Law Brothers’ View:
- Such supplies are exempted vide Notification No. 12/2017- CT(R). Section 23 overrides the section 22(1) therefore such an advocate is not required to be registered.
- Such a person is also not liable to pay RCM (being other than the business entity)as perNotification No. 12/2017- CT(R). So, there is no question of applicability of section 24 for the recipient here.
FAQ 4. An Advocate supplies legal services to a person (a business entity having turnover exceeding the threshold limit, Running the business of agriculture produce out of cultivation of land) through ECO (say, www.lawbrothers.com) and the aggregate turnover of such advocate exceeds the threshold limit during the F.Y. Both the supplier and recipient are located in same state.
- Whether the advocate is liable to registration?
- Whether the business entity is liable to registration?
Law Brothers’ View:
- Such supplies are exempted vide Notification No. 12/2017- CT(R). Section 23 overrides the section 22(1) therefore such an advocate is not required to be registered.
- This transaction falls under RCM as perNotification No. 13/2017- CT(R)]. So, even though there is an applicability of section 24 still such a person is also not liable to registration as section 23 (wholly exempted) overrides the section 24 (RCM).