28 February 2020
The taxpayer company is registered under GST in Punjab having turnover of Rs. 10 Cr. It has set up a wind power plant in Himachal Pradesh from where electricity so generated shall be sold to the local company in the Himachal Pradesh. As the wind power being 'electrical energy' is exempt from GST, therefore, the taxpayer shall be exclusively engaged in effecting exempt supply in Himachal Pradesh state. In this background, do the taxpayer company need to get registration under GST in Himachal Pradesh?
27 July 2024
Given the scenario you described, where the taxpayer company is registered under GST in Punjab and has set up a wind power plant in Himachal Pradesh to generate and sell exempt electricity, here’s a detailed analysis of whether the company needs to obtain GST registration in Himachal Pradesh:
Under GST law, businesses are required to obtain GST registration if they engage in the following activities:
1. **Supply of Goods or Services:** If the company is engaged in taxable supply of goods or services, it needs to be registered. 2. **Inter-State Supply:** Even if the supplies are exempt, GST registration is generally required if the business is engaged in inter-state supplies. 3. **Place of Business:** If a company has a place of business in a state, it generally needs to be registered in that state.
### **2. Exempt Supply and GST Registration**
- **Exempt Supply:** According to GST law, the supply of electrical energy is exempt from GST. However, exemption does not negate the requirement of registration if the business is operating in a different state and conducting any business activities there. - **Inter-State Supply:** The fact that the company’s wind power plant in Himachal Pradesh is involved in exempt supply (electricity) does not automatically exempt it from the requirement to be registered in Himachal Pradesh.
### **3. Requirement of Registration**
Based on the provided information, here’s the detailed reasoning:
1. **Place of Business:** The company has a physical presence in Himachal Pradesh due to the wind power plant. Therefore, it is generally required to obtain GST registration in Himachal Pradesh, regardless of the nature of the supplies (exempt or otherwise).
2. **Inter-State Transactions:** Since the electricity generated in Himachal Pradesh will be sold to a local company in Himachal Pradesh, this activity is considered a supply made within the state. The GST law necessitates registration if there is a physical presence in the state where business activities are conducted.
3. **Registration for Exempt Supplies:** Even though the supply of electrical energy is exempt from GST, registration is still necessary if there is a physical place of business. The company’s exemption status pertains to the taxability of its supplies, not the registration requirement.
### **4. Practical Steps**
Given the above points, the company should:
1. **Apply for GST Registration in Himachal Pradesh:** Obtain GST registration in Himachal Pradesh to comply with the requirement for having a place of business in the state. 2. **Maintain Proper Records:** Ensure that all records related to the exempt supplies are maintained properly. Even though the supply is exempt, proper documentation and compliance with GST regulations are essential.
### **Summary**
Yes, the taxpayer company needs to obtain GST registration in Himachal Pradesh despite the electricity supply being exempt from GST. The need for registration arises from having a place of business in the state, which necessitates compliance with GST regulations.
For further assistance, consider consulting a GST professional or tax advisor to ensure all compliance requirements are met and to address any specific issues related to your case.
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