Section 27 of GST – Special provisions relating to casual

Section 27 of GST – Special provisions relating to casual taxable person and non-resident taxable person. Check complete details for GST Section 27, this section is provide all details for Special provisions relating to casual taxable person and non-resident taxable person. Detailed Analysis of GST Section 27 of GST Act 2017 – Special provisions relating to casual taxable person and non-resident taxable person.

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Section 27 of GST

(1)The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier and such person shall make taxable supplies only after the issuance of the certificate of registration:

Provided that the proper officer may, on sufficient cause being shown by the said taxable person, extend the said period of ninety days by a further period not exceeding ninety days.

(2) A casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration under sub-section (1) of section 25, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought:

Provided that where any extension of time is sought under sub-section (1), such taxable person shall deposit an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is sought.

(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person and shall be utilized in the manner provided under section 49..

Related provisions of the Statute:

Section or Rule Description
Section 2(20) Definition of “casual taxable person”
Section 2(77) Definition of “non-resident taxable person”
Section 22 Persons liable for registration
Section 24 Compulsory registration in certain cases
Section 25 Procedure for registration

Analysis

Casual taxable person (‘CTP’) is defined in section 2(20) to be a ‘person’ and not ‘registered person’ who occasionally undertakes transactions involving supply, etc. This definition in CGST Act is also present in SGST/UTGST Act. So, there are ‘two States’ that come in for consideration, that is, one State where the said person is ‘regularly’ undertaking transactions involving supply and another State where the said person is ‘occasionally’ undertaking transactions involving supply. This two-State premise is explained by the fact that if the said person is only present in one State, then in that State whether the transactions undertaken are ‘regular’ or ‘occasional’ are not relevant because the said person cannot be denied the ‘exemption threshold’ (available in section 22) in that State. So, the two-State premise identifies the State where the said person is ‘regularly’ undertaking transactions of supply (home-State) and the other where the said is ‘occasionally’ undertaking transactions of supply (host-State).

As such, whether a person is CTP or not in host-State must be examined independent of ‘registration status’ in home-State. A person may enjoy exemption threshold in home-State and (therefore) not registered but when such person undertakes transactions of supply in host-State, then such person will be liable to register in host-State and by virtue of taxable supplies in two States, registration in home-State may be triggered under section 24(i) in respect of inter-State taxable supplies of either (i) goods that may be carried to host-State for onward sales in host-State or (ii) services of supervision and management oversight that may be availed by distinct person in host-State from the owner/proprietor in home-State (where salaries are incurred).

Occasional’ means non-recurring and does not mean ‘intermittent’. First-time application to register as CTP may not be questioned about the ‘occasional’ nature of transactions involving supply in host-State but a second-time application (after deregistration on completion of said occasional project) may not be readily accepted. Second and subsequent occasion of CTP registration may actually call for an inquiry into possibility of ‘regular registration’ in said hostState. So, there are multiple ways in which one could go wrong with CTP and experts caution that CTP should not be interchanged with regular registration.

Contrasted with CTP, non-resident taxable person (‘NRTP’) may be examined by its definition in 2(77) which appears to be identical to the definition of CTP in 2(20) except for:

From the above comparison, the following aspects may be noted:

  • CTP must have a pre-existing ‘business’ except that there is no POB in host-State but the question of pre-existing business is irrelevant for NRTP. But when supply in section 7(1) is attracted only when there is a ‘business’, whether NRTP could be come within the scope of supply in the absence of a business. Answer may be found in section 7(1)(b) where ‘business’ is NOT a criterion to come within the definition of ‘supply’. Also, please note that vide entry 10(b) to 9/2017-Int. (R) dated 28 Jun 2017, ‘non business purposes’ have been exempted from GST. So, ‘business’ does become relevant factor even for NRTPs. Care must be taken to come within the IGST exemption and not presume that non-business activities by NRTPs will be exempt because this entry 10(b) found in IGST exemption is NOT available in CGST exemption notification (12/2017-CT(R) dated 28 Jun 2017). So, pre-existing business is relevant for CTP and NRTP but on different basis;
  • CTP in one who does not have a POB in host-State but NRTP should neither have POB or Residence in the whole of India. Please take care to avoid erroneous classification of Project Offices and Branch Offices as NRTP. They do have a POB as stated in their RBI approval. So, PO and BO (of foreign companies) are NOT CTPs or NRTPs but liable to regular registration even though they may undertake only one project (esp. PO). Now, Liaison Office or Representative Office (of foreign companies) are barred from undertaking any ‘business-like’ activities and hence are neither CTP nor NRTP. Reference may be had to Raj. AAR in HABUFA MEUBELEN B.V. 2018 (14) G.S.T.L. 596 (AAR) wherein LO was held not to be liable to registration under GST. Care must be taken to investigate if LOs attract registration under section 24(iii) for making payments attracting GST on reverse charge basis.

The certificate of registration issued to a “casual taxable person” or a “non-resident taxable person” shall be valid for a period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier, extendable by proper officer for further period of maximum 90 days at the request of taxable person.

A casual taxable person or a non-resident taxable person, while seeking registration, shall make an advance deposit of tax in an amount equivalent to the estimated tax liability. Where any extension of time is sought, such taxable person shall deposit an additional amount of tax equal to the estimated tax liability for the period for which the extension is sought.

Such deposit shall be credited to the electronic cash ledger of casual taxable person or nonresident taxable person and utilized in the manner provided under section 49 (Payment of tax, interest, penalty and other amounts) of the Act.

Since the nature of the activity carried out by a casual taxable person and non-resident taxable person are temporary as compared to a regular taxable person, additional safeguards have been placed to ensure that the registration is granted for a limited period and the tax liability is recovered in advance. Rule 13 of the CGST Rules, 2017, provides for the detailed process of grant of registration to non-resident taxable person and rule 15 provides for the process of extension in period of operation by casual taxable person and non-resident taxable person.

A non-resident taxable person shall electronically submit an application, along with a selfattested copy of his valid passport, for registration, duly signed or verified through electronic verification code, in FORMORM GST REG-09, at least five days prior to the commencement of business. In the case of business entity incorporated or established outside India, the application for registration shall be submitted along with its tax identification number or unique number on the basis of which the entity is identified by the Government of that country or it’s Permanent Account Number. A person applying for registration as a non-resident taxable person shall be given a temporary reference number by the common portal for making an advance deposit of tax in accordance with the provisions of section 27 and the acknowledgement under sub-rule 5 of rule 8 shall be issued electronically only after the said deposit in his electronic cash ledger.

Rule 9 and rule 10 of the CGST Rules, 2017 shall also apply to an application submitted under this rule. The application for registration made by a non-resident taxable person shall be duly signed or verified through electronic verification code by his authorized signatory who shall be a person resident in India having a valid Permanent Account Number. Where a registered casual taxable person or a non-resident taxable person intends to extend the period of registration indicated in his application of registration, an application in FORM GST REG-11shall be submitted electronically, by such person before the end of the validity of registration granted to him. Such application shall be acknowledged only on payment of the amount specified in sub-section (2) of section 27.

Circular No. 71/45/2018-GST dated October 26, 2018, clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a casual taxable person and thus, such person would be required to obtain registration as a normal taxable person. In such cases he would not be required to pay advance tax for the purpose of registration.

Deposit of tax

There was lack of clarity on whether the term ‘tax liability’ refers to output tax liability before adjustment of input tax or after adjustment of input tax. Having to make an advance deposit of tax on the output tax liability (without adjustment of input tax) would be unfair to the taxpayers and cause undue financial hardships. In this regard, Circular No. 71/45/2018-GST dated October 26, 2018 has been issued to clarify that tax to be deposited by the casual taxable person will be “estimated net tax liability” after considering ITC available to such taxable person.

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