Manufacturer of exempt supplies requires to take GST Registration if liable to pay tax on reverse charge basis

Categories: Advance Ruling
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M/s. Jalaram Feeds is engaged exclusively in manufacture and sale of animal feeds, making certain quantity of taxable supply of goods transport service by way of reverse charge mechanism would fall within scope of Section 24 of the CGST Act for the purpose of registration and hence would be required to obtain registration under the CGST Act in order to discharge his duty liability under reverse charge.

Facts:

M/s. Jalaram Feeds (“the applicant”) is engaged exclusively in manufacture and sale of compound animal feeds vide HSN Code: 2309 which are exempt from tax vide Entry No. 102 of the Notification No. 2/2017 Central Tax (Rate) dated June 28, 2017. Further, the applicant also requires Services form Goods Transport Agency (“GTA”) like any other business.

Issue Involved:

Whether the firm is liable to take registration under Section 24 or is exempted from registration under Section 23 of Central Goods and Services Tax Act, 2017 (“CGST Act”)?

Applicant’s Interpretation of Law:

The applicant is of the view that they are not required to obtain registration under the CGST Act as they are engaged exclusively in the business of supply of goods or services or both that are not liable to tax or wholly exempt from tax as provided under Section 23 of the CGST Act.

Further, a person who is engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax is not liable for registration under Section 23 of the CGST Act.

Thus Section 23 is not contrary to Section 22 of the CGST Act but is clear expression of the intent of Section 23. Therefore there is no force in the contention of the applicant that Section 23 is a specified Section and independent and not over ruled by Section 24 of the CGST Act.

Held:

The Hon’ble AAR, Maharashtra vide Order No. GST-ARA-110/2018-19/B-38 dated April 10, 2019 held that the applicant is liable to take registration as per the provisions of Section 24 of the CGST Act.

Further the applicant would go out of the scope of Section 23 of the CGST Act due to making of certain quantity of taxable supply of goods transport service by way of reverse charge mechanism and would fall within scope of Section 24 for purpose of registration and hence would be required to obtain registration under CGST Act in order to discharge his duty liability under reverse charge notwithstanding the turnover limit specified in Sub Section (1) of Section 22 of the CGST Act.

Citation: [2019] 106 taxmann.com 241 (AAR – MAHARASHTRA)