The registration under GST is PAN based and State-specific. Every taxable person (subject to threshold limit) is required to obtain a PAN based registration in each of such State or Union territory from where he affects taxable supply. In GST registration, the supplier is allotted a unique 15-digit alphanumeric number called “GSTIN” (GST Identification Number) begin with state code. Without registration, a person can neither collect tax from his customers nor claim any input Tax Credit of tax paid by him.
As per Sec 22(1), every supplier shall be liable to be registered under GST, in the State or Union territory, from where he makes taxable supply of goods or services or both if his aggregate turnover in an F.Y exceeds threshold limit. In case of inter-state supply of goods (except handicraft goods/goods sent for Job work), registration is mandatory irrespective of threshold limit , whereas in case of inter-state supply of services, registration is mandatory only if, the turnover in an F.Y exceeds Rs.20 lakhs (Rs. 10 lakhs in case of special category states). It is pertinent to mention that registration under GST 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. The tax goes to the destination State but registration is required in the origin-State. In the case of "works contract" service which is immovable in nature, the place of supply is where the immovable property is located. Place of Supply (as determined from IGST Act) provides the ‘destination’ and this is not relevant for registration. The location of the supplier is relevant for registration.
Therefore, a taxable person who is providing works contract service shall be required to obtain registration in the state from where he is providing services.
As per Sec 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;
As per Sec 2(50), “fixed establishment” 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.
Example 1: A service provider in the business of renting of immovable property has its registered office at Delhi (place of business).The property for rent is located in Mumbai (place of supply). In this case, the registered office (Delhi) will be the principal place of business but the property in Mumbai will NOT be regarded as a fixed establishment of the service provider as the degree of permanence required in representing the interests of the supplier in terms of human & technical resources, does not exist in Mumbai. Registration under GST is required in Delhi & not in Maharashtra.
Example 2: A contract is for supply, installation, testing & commissioning of fire fighting system where the duration of installation work at the site is (say) 3 months, at Chamba, HP. The fabrication of equipment is undertaken at the factory at Kolkata and the materialsare transported to the site (Chamba, HP) and Engineers & technical teams are deputed for installation, testing & commissioning. For the limited duration of 3 months, the installation team will be present at the site office i.eat Chamba HP. In this case, the factory will be the principal place of business (Kolkata) but the site (Chamba, HP) will NOT be regarded as a fixed establishment of the supplier. Registration under GST is required in West Bengal & not in Himachal Pradesh.
Example 3: M/s GE Electricals Ltd, a company registered in Mumbai is engaged in the business of Supply, installation, testing & commissioning of Switchyard equipment for power station across the country, is registered under GST in the state of Maharashtra. The company was awarded a contract of Rs.20 Crores by M/s NHPC Ltd for construction of Switchyard systems for one of its power plants located in the state of Himachal Pradesh. The company (GE Electrical) supplied the materials/equipment from their Mumbai factory & depute their technical staffs & engineers to HP for a period of six months, for installation, testing & commissioning of the work. Is M/s GE Electricals Ltd is required to obtained registration under GST in the state of Himachal Pradesh.
Ans. The activity of Supply, installation, testing & commissioning of Switchyard equipment is a composite supply. Since the switch yard equipment are affixed permanently on earth, it is a works contract in relation to immovable property and squarely covered under Sec 2(119) of CGST Act. Further, as per Para 6(a) of Schedule II to the CGST Act,2017, works contract as defined in section 2(119) of the CGST Act,2017 are treated as supply of service. In case of the supply of service related to immovable property, location of supply is where the immovable property is located. As per Sec 22(1), registration is required in the state from which taxable supply is made. Since the company is making a supply of works contract service from Mumbai, registration in is requiredMaharashtra. Since M/s GE Electricals Ltd does not have a fixed place of business/ establishment in the state of Himachal Pradesh (HP), registration under GST in the state of HP is not required. This view has also been upheld by Authority of Advance Ruling (AAR, Rajasthan) in their Order No. Raj/AAR/2018-19/07 Dated 01-07-2018 in the matter of M/s Jaimin Engineering Pvt Ltd.
Example 4: Mr X, a registered person who is engaged in renting of commercial property is having a principal place of business at Kolkata but few commercial properties are also located in Delhi, which is let out.Is Mr. X is required to obtain registration under GST in Delhi.
Ans. Since the principal place of business is located in Kolkata from where service is provided, registration under GST is required in Kolkata (West Bengal). Registration under GST in Delhi shall be required if Mr. X has any fixed establishment/place of business in Delhi. Mere location of the property in Delhi shall not be treated as fixed place of business, though the place of supply of service is Delhi being immovable property. There should be sufficient degree of permanence and suitable structure in terms of human and technical resources at Delhi to supply services, to qualify for registration.
Example 5: M/s Lanco Infratech Ltd (contractee), having its corporate office in Mumbai awarded a contract to M/s Gammon Infra Ltd, Hyderabad (contractor) for construction of a Dam in the state of Sikkim. M/s Gammon Infra Ltd is registered under GST in the state of Telangana. The duration of the contract is for 3 years. Is M/s Gammon Infra Ltd (contractor) is required to obtain registration under GST in the state of Sikkim.
Ans. As per Sec 22(1) of CGST Act, registration under GST is required ‘in’ the State ‘from which’ taxable supplies are made. Construction of Dam is a “works contract” service being immovable in nature and place of supply is Sikkim where the immovable property is located. For the purpose of construction of Dam, huge qty of Steel, Cement, sand, aggregates, other construction materials & engineer, technician, labour are required. The nature of supply & duration of the contract is such that, it cannot be supplied from Hyderabad, Telangana. So, a fixed establishment is required in the state of Sikkim, where the work is being carried out. Therefore, registration under GST is mandatory for M/s Gammon Infra Ltd,in the state of Sikkim.
The author can also be reached at gstresolve@gmail.com
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