Dear Member,
My thoughts on the issues are as under -
Q. 1 - Liability to register under GST
Section 139(1) r.w. section 22(1) cast a liability on every person registered under earswhile law, to get himself register under GST. However at the same time option has been given under Rule 24(4) to apply for the cancellation of registartion if he is not liable to be register under the GST Act.
It clearly indicates that, the principal condition for registartion under GST law is turnover limit of Rs 20 Lacs [Sec 22(1)]. If the register person is of the opinion that, he will not cross the limit, he may opt to cancel his registartion.
Further, It is also provided in section 139(1) r.w. Rule 24(3) that, if after getting the provisional registration, taxpayer fail to submit the requisite documents Or file the form FORM GST REG–26, the Officer Shall cancel the provisional ID allotted to taxpayer.
Combine Reading of above provisions indicates that, liablity to register under new law for existing taxpayer is mere a facility to ensure the free flow or migration so that business continuity (such as availing ITC, credit for stock) is not hamper. It does not seems that, law wants existing taxpayer to complusory register themself and pay the tax even if there is T/over is less than 20 Lacs. Otherwise withdrawal option under Rule 24(4) is not required at all. Option for cancellation under section 29 is always there. The option is given so that, their withdrawal can be given effect right from 01.07.17. Same is the case, if officer himself cancel the provisional ID for not filling the form. Even in such case, provisional ID would be cancelled from 01.07.2017.
We can put it in this way - rather than first registering himself under GST and then applying for canellation, tax payer decided not to register himself at all as officer was anywhich way empowered to cancel the ID for not filling the form.
This can at the most br term as a procedural lapse and hence I believe tax payer can not be held liable for not registering under the Act and hence made liable to pay tax.
Q.2 Tax Liability for FY 17-18 and subsequent year
We have concluded that, since GSTIN status is "Not Migrated" means taxpayer will be treated as Unregistered Dealer for FY 17-18.
Now even if we assume that, he is liable for registartion and further liable to pay tax during FY 17-18, for the subsequent period he may not be liable to pay tax if his T/over is less than 20 Lacs in subsequent years for followings reasons -
1. Section 22(1) states that, the person is liable for registation if his aggregate turnover in a financial year exceeds twenty lakh rupees
2. Here turnover limit is prescribed for a F.Y. unlike the earswhile law where liability to register was subject to T/over in preceeding FY. Hence liability to register shall be ascertained for each FY separately (provided he is an Unregisted peson). Law did not use the words "Any, previose or preceeding FY"
3. Even if he is liable for registartion in FY 17-18 and liable to tax, for FY 18-19 he is not liable for registartion as his T/over for FY 18-19 is less than 20 Lacs. For Example turnover for veriose years are as under -
FY 19-20 = 20.50 Lacs
FY 20-21 = 0 (due to covid)
FY 21-22 = 0 (due to covid)
FY 22-23 = 10 Lacs ( restart his business)
Now if we assume that, since he taxpayer is liable for registration in FY 19-20, he shall pay tax for FY 22-23 and so on this would lead to absurd interpretaion. As liablity in such a case would be for infinite period unless he takes a registartion subsequently. There wont be any boundry to tax a person even though T/over is within thresehold limit.
Hence in our query, I believe that, even if tax liablity arises in FY 17-18, still tax may not be levied for subsequent year if T/over is less than 20 Lacs. (Provided tax payer is unregister. In case of register Taxable person the same is not applicable as all the provisions of law would be applicable irrespective of T/Over limit)
Above explanation is only thoughts and not the opinion. I would like to request experts to guide us on this. Any alternative view is highly appreciated.
Section 139 (1) - On and from the appointed day, every person registered under any of the existing laws and having a valid Permanent Account Number shall be issued a certificate of registration on provisional basis, subject to such conditions and in such form and manner as may be prescribed, which unless replaced by a final certificate of registration under sub-section (2), shall be liable to be cancelled if the conditions so prescribed are not complied with.
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