NRTP Registration - 2

[KSA Associates]

ABC limited of India Sent goods to XYZ limited of India under billed to/Shipped to model.

Bill to - Q incorporation USA

Shipped to - XYZ limited India.

Further, Q incorporation raised bill on XYZ limited on this transaction . Kindly guide us to evaluate whether Q incorporation is liable to take under registration under NRTP?

[YAGAY andSUN]

In the given scenario, the transaction follows a "Bill to - Ship to" model involving three parties:

• ABC Ltd. (India): Supplies goods.
• Q Incorporation (USA): Receives the invoice (Bill-to).
• XYZ Ltd. (India): Receives the goods (Ship-to).

Further, Q Incorporation (USA) raises an invoice to XYZ Ltd. (India) — implying Q Incorporation is acting as a supplier in a subsequent transaction involving supply of goods within India.

Key GST Implications:

1. First Leg – ABC Ltd. (India) → Q Incorporation (USA):
   • This is a domestic supply (since ABC Ltd. is in India), even though the invoice is raised to a foreign company (Q Inc.).
   • Under Section 10(1)(b) of the IGST Act, in "Bill to - Ship to" cases, the place of supply is the location of the Bill-to party (Q Inc. USA).
   • However, since Q Inc. is outside India, the place of supply becomes outside India — yet, this is not an export, as goods do not cross Indian borders.
   • Thus, GST is still levied, and it is interstate supply — IGST applicable.
2. Second Leg – Q Incorporation (USA) → XYZ Ltd. (India):
   • Here, Q Inc. is supplying goods located in India to XYZ Ltd., another entity in India.
   • This constitutes a taxable supply within India.

Whether Q Incorporation is liable to register as NRTP:

Yes, Q Incorporation is liable to register as a Non-Resident Taxable Person (NRTP) in India.

Reason:

• As per Section 24(v) of the CGST Act, any non-resident making a taxable supply in India must take registration as an NRTP.
• Since Q Inc. is not located in India, but is engaged in the supply of goods situated in India to an Indian recipient, it is making a taxable supply in India.
• There is no exemption available, even if tax is discharged under reverse charge (which may not be applicable in this case, since this is a supply of goods, not services).

Conclusion:

Q Incorporation (USA), by supplying goods within India (even indirectly), is engaged in a taxable transaction under GST law. Therefore, it is mandatorily required to obtain GST registration in India as a Non-Resident Taxable Person (NRTP) prior to making the supply.

[Shilpi Jain]

In this case Q can supply the goods to XYZ from abroad itself and it need not come to India. So no nrtp registration required.

If a view is taken that nrtp registration is required then many cross border transactions will lead to this conclusion which would be absurd.

[KASTURI SETHI]

In this context, it is worth while to peruse the following circular:-

Non-resident taxable person in GST

C.B.E. & C. Flyer No. 8, dated 1-1-2018

Introduction

“Non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

A non-resident taxable person making taxable supply in India has to compulsorily take registration. There is no threshold limit for registration. A non-resident taxable person cannot exercise the option to pay tax under composition levy. He has to apply for registration at least five days prior to commencing his business in India using a valid passport (and need not have a PAN number in India). A business entity incorporated or established outside India, has to submit the application for registration 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 its Permanent Account Number, if available.

A non-resident taxable person has to make an advance deposit of tax in an amount equivalent to his estimated tax liability for the period for which the registration is sought.

Registration

A non-resident taxable person is not required to apply in normal application for registration being filed by other taxpayers. A simplified form GST REG-09 is required to be filled. A non-resident taxable person has to electronically submit an application, along with a self-attested copy of his valid passport, for registration, duly signed or verified through EVC, in FORM GST REG-09, at least five days prior to the commencement of business at the Common Portal either directly or through a Facilitation Centre notified by the Commissioner.

In case the non-resident taxable person is a 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 its PAN, if available.

The application for registration made by a non-resident taxable person has to be signed by his authorized signatory who shall be a person resident in India having a valid PAN. On successful verification of PAN, mobile number and e-mail address the person applying for registration as a non-resident taxable person will be given a temporary reference number by the Common Portal for making the mandatory advance deposit of tax for an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought. The registration certificate shall be issued electronically only after the said deposit appears in his electronic cash ledger. The amount deposited shall be credited to the electronic cash ledger of the non-resident person.

The non-resident taxable person can make taxable supplies only after the issuance of the certificate of registration. The certificate of registration shall be valid for the period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier.

In case the non-resident taxable person intends to extend the period of registration indicated in his application of registration, an application in FORM GST REG-11 shall be submitted electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, before the end of the validity of registration granted to him. The validity period of ninety days can be extended by a further period not exceeding ninety days. The extension will be allowed only on payment of the amount of an additional amount of tax equivalent to the estimated tax liability for the period for which the extension.

Input Tax Credit

Input tax credit shall not be available in respect of goods or services or both received by a non-resident taxable person except on goods imported by him. The taxes paid by a non-resident taxable person shall be available as credit to the respective recipients.

Returns

The non-resident taxable person shall furnish a return in FORM GSTR-5 electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, including therein the details of outward supplies and inward supplies and shall pay the tax, interest, penalty, fees or any other amount payable under the Act or these rules within twenty days after the end of a calendar month or within seven days after the last day of the validity period of registration, whichever is earlier.

Refund

The amount of advance tax deposited by a non-resident taxable person at the time of initial registration/extension of registration, will be refunded only after the person has furnished all the returns required in respect of the entire period for which the certificate of registration granted to him had remained in force. Refund can be applied in the serial no. 13 of the FORM GSTR-5.