Availability of ITC in case of event management / wedding planning company

[RAGHAV SHARMA]

Mr A is having business of event management and registered in the state of Punjab. Mr A is providing services to client B (unregistered) for one of event and event is in hotel which is located in Haryana. To claim ITC on the inputs for the event held in Haryana, is it required to take separate gst registration for Mr A in Haryana?

Second query is, what should Mr A charge in his bill to Client, Is it CGST/SGST or IGST?

Kindly guide

[KASTURI SETHI]

Sh.Raghav Sharma Ji,

It is inter-State supply of services. Raise invoice charging IGST. New registration is not required. Registration is required only from where taxable supply is made (where the supplier has fixed establishment) and NOT 'where' taxable supply is made..

[KASTURI SETHI]

Section 22 (1) of CGST Act extracted below :-

SECTION 22. Persons liable for registration. — (1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees :

[Shilpi Jain]

Ideally clients book an agent in the city in which the event happens so that the agent is able to take the ITC of the GST charged by the hotel.

If Mr. A is not in the city where the event is held then the CGST and SGST of other States charged by the hotels will not be an eligible credit but a cost for Mr. A thereby leading to increased prices or reduced profit margins.

[RAGHAV SHARMA]

Hotel will Charge CGST/SGST in the invoice. Agent is not feasible in this case, as per my understanding we can go for casual registration which can solve the purpose. We can claim the ITC and set off with the liability with casual registration.

[KASTURI SETHI]

If you intend to opt for registration as casual taxable person, peruse Section 27 of CGST Act and Board's circular No. Circular No. 71/45/2018-GST, dated 26-10-2018, Board's Flyer No. 1 & 9 both dated 01.01.18.

Also go through the following FAQ :-

Registration by Casual Taxable Person — FAQ

Source : http://tutorial.gst.gov.in

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Indirect Taxes & Customs, New Delhi

1. I want to take a Registration as a Casual Taxable Person but I can’t find the option.

The option to register is in the New Registration Application for a normal taxpayer.

In PART A of the New Registration Application, select Taxpayer [Reference screenshot (highlighted)] :

2. In PART B of the New Registration Application in the Business Details section, select Yes under ‘Are you applying for registration as a casual taxable person?’ as shown in the screenshot below :

3. Enter the estimated values of supplies and estimated net tax liability as CGST + SGST/IGST and cess for the period for which registration is applied and click the GENERATE CHALLAN button. This option is also available after all tabs of Part B of the Registration application is filled up.

4. Make the advance tax payment using the payment modes available on the GST Portal and then complete Part B of the registration application and submit it.

5. Your registration will be granted after due processing by the concerned Tax Official.

2. Can a Casual Taxable Person opt for Composition?

Casual Taxable Person cannot opt for composition.

3. When should I apply for a Registration as a Casual Taxable Person?

You should apply for Registration as a Casual Taxable Person at least 5 days prior to the commencement of business.

4. How long is the Registration as a Casual Taxable Person valid?

The certificate of registration issued to a casual taxable person shall be valid for the period specified in the application for Registration or ninety days from the effective date of registration, whichever is earlier.

5.Can I extend my Registration as a Casual Taxable Person?

Yes, you can extend your Registration as a Casual Taxable Person once for an additional period of 90 days, if you apply for extension of registration before the expiry of the initial period for which registration was granted.

6.I have already extended my initial registration once and cannot extend it a second time as per prevailing laws. What do I do if my extension is about to expire and my business has not concluded?

In such a case, you are required to obtain registration as a normal taxpayer in the concerned state.

7.The moment I select Registration as a Casual Taxable Person option, the New Registration Application prompts me to fill a GST Challan. Why?

In case of Registration as a Casual Taxable Person, you are required by law to deposit the tax in advance equivalent to the estimated tax liability based on the estimated turnover for the period for which the casual registration has been obtained. A provisional GSTIN will also be generated and prefilled in the challan. The status of this GSTIN will be provisional until your application is approved by the tax authority and the casual registration is officially granted.

8. Is there a fixed amount I must deposit with the GST authorities before taking a Registration as a Casual Taxable Person?

No, you are required by law to deposit the tax in advance equivalent to the estimated tax liability based on the estimated turnover for the period for which the casual registration is being obtained by you.

9. Can a Casual Taxable Person take multiple registrations in a State?

In case a Casual taxable person has multiple business verticals within one state, the Casual taxable person can apply for multiple registrations within the state.

10. I have deposited advance tax but do not want to continue the business. How shall I get my money back?

You can apply for refund of advance tax deposited at the time of filing of application for surrender of registration.

[Ganeshan Kalyani]

You can check for Rule 33 - Pure Agent Service. Mr. A, the event management company in Punjab cannot avail the credit of the GST charged by hotel in Haryana. and client B is unregistered so he is not concerned about the credit. If you apply rule 33 then hotel will directly bill on client B. For reference or commission or professional fees, hotel will bill on Mr. A as IGST which he can claim as ITC against the liability C+S on invoice raised for professional fees on client B.

[Yash Shah]

In relation to place of supply related provisions under IGST Act, the invoicing which Hotel would do to Mr. A would be C+S as it would lie where the immovable property is located as per Section 12(3) of the IGST Act.

However as per provisions of place of supply for event related activities, the place of supply would be defined as per Section 12(7) which will be the case where Mr. B is unregistered and hence the charging would also be C+S as it would lie where the event is held, if in india - if it is outside india - place of recipient.

AI Summary

Place of supply rules determine IGST versus CGST/SGST and affect registration and ITC eligibility for event management supplies. Place of supply rules determine tax treatment and registration needs for event management services: services performed at an immovable location in another State to an unregistered client are treated as inter state supplies and invoiced under IGST. Registration obligation depends on the State from which the supplier makes taxable supplies; separate registration in the event State is not automatically required. A supplier may instead obtain Casual Taxable Person registration (advance tax deposit, limited validity, no composition) to secure ITC, or use agency/pure agent arrangements to affect invoicing and ITC eligibility.