Who is NOT liable to register under GST? – Non Applicability of GST

Introduction    

This article explains the important part of GST which lays down that who is NOT required to get register under GST. As a simple rule, if you are supplying goods and services within a state of more than 20 Lakh in a financial year, then you are liable to register for GST. However, the same rule explains the concept of two categories of the person which are not required to register under GST.

Let us have a look at those two categories.

There are only two categories of person which are not liable for registration which are as follows;

• Any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.
• An agriculturist, for the purpose of agriculture.

Let us understand each of the above two in details.

• Any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.

If any person is exclusively dealing in goods/services which are not liable to tax or are wholly exempt from tax, then he shall not be liable to take registration. The word ‘exclusive’ has its own importance here. The exemption with regard to registration shall only be applicable if one is dealing only in non-taxable or wholly exempt goods/services.

He is not required to take registration even if his turnover exceeds 20 lakh. Hence, basic exemption limit shall have no reference under this provisions.

However, what would happen if one is dealing in non-taxable goods/services, but not exclusively i.e. dealing in other taxable goods/services as well simultaneously? The following situations may emerge.

#Case 1: Person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.

A person is not liable for registration under GST.

#Case 2: Person engaged in the business of supplying taxable and non-taxable goods and/or services in a state but the aggregate turnover of taxable goods is less than 20 Lakh.

Once the person is not exclusively dealing in non-taxable/exempted goods and /or services, then the person shall look for the basic exemption limit.

According to basic exemption limit, every supplier shall be liable to be registered if he makes a taxable supply of goods and/or services and his aggregate turnover in a financial year exceeds twenty Lakh rupees [ten lakh in case of north eastern states].

In our case, the aggregate turnover of the taxable supply of goods and/or services is less than twenty lakh. Hence, the person is not liable to registration as per clause 1 of Schedule V.

#Case 3: Person engaged in the business of supplying taxable and non-taxable goods and/or services in a state and the aggregate turnover of taxable goods is more than 20 Lakh.

Once the person is not exclusively dealing in non-taxable/exempted goods and /or services, then the exception for registration does not apply, and the case shall be interpreted in consonance with basic exemption limit.

As said, in our case, the aggregate turnover is more than 20 Lakh, i.e. exceeding the basic exemption threshold limit as mentioned hence person is liable for registration.

#Case 4: Person engaged exclusively in the business of supplying non-taxable goods and/or services outside the state.

Any person falling under exceptions to mandatory registration is not liable for registration even if the supplies are made outside the state or even exported.

#Case 5: Person engaged in the business of supplying taxable and non-taxable goods and/or services outside the state and the aggregate turnover of taxable goods is less than 20 Lakh.

Once a person is supplying any taxable goods/services outside the state irrespective of the value, then that person is mandatory liable for registration under GST law.

#Case 7: Person engaged in the business of supplying non-taxable goods and also exporting some taxable goods and the aggregate turnover of which is less than 20 Lakh.

The person is liable for registration as exports are treated in line with interstate supply. Hence, any person making any interstate supply shall be liable for registration.

• ​​​​​​​An agriculturist, for the purpose of agriculture

This is the second category of person that has been kept out of GST preview and it one of the latest and important concept that has been inserted into the new GST law.

Agriculturist means a person who cultivates land personally, for the purposes of agriculture. The definition and analysis of this definition are very important, and hence we have covered that in the next article.

Conclusion

The simplicity as claimed by the government under GST is questionable. One can see how technical this has become. Hence, in the case of any query, you can post that in our CONTACT FORM.