Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services across India. Introduced in 2017, the GST regime replaced multiple cascading taxes such as excise duty, VAT, and service tax, streamlining the country’s taxation system.
GST operates on a multi-level structure comprising the Central GST (CGST), State GST (SGST), and Integrated GST (IGST), ensuring uniformity across states while allowing for state-specific revenue collection regulated by governmental nodes.
GST registration is mandatory for businesses whose annual turnover exceeds the prescribed threshold which is generally Rs. 20 lakhs for service providers and Rs. 40 lakhs for suppliers of goods. However the threshold limit warranting GST registration is lower in special category states. Additionally, specific businesses such as those engaged in inter-state supplies, e-commerce operators, and entities liable under the reverse charge mechanism are required to compulsorily conduct GST registration irrespective of turnover.
The registration process is regulated by the Goods and Services Tax Network (GSTN), an Information Technology (IT) backbone facilitating compliance and administration utilizing the digital landscape. Once registered, businesses are assigned a unique Goods and Services Tax Identification Number (GSTIN) which is crucial for conducting taxable transactions.
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In many instances surrounding ambiguity on the applicability of GST, the jurisdictional Authorities for Advance Ruling (AAR) have pitched in, delivering one-off judgments that may be used by applicants for persuasive purposes in different contexts.
The issue of whether multiple companies can register for GST at the same address was clarified in the case of In Re: M/s Spacelance Office Solutions Pvt Ltd (2019 TAXSCAN (AAR) 127).The applicant, engaged in leasing co-working spaces sought clarification on whether different businesses operating from a shared address could each obtain a distinct GST registration.
The Kerala Authority for Advance Ruling held that multiple GST registrations at the same address are permissible, provided each entity has a distinct identification, such as a dedicated desk or cabin number. This ruling acknowledges the evolving nature of workspace usage, particularly with the rise of co-working environments while reinforcing the liberty of flexibility exercisable by businesses operating within shared premises.
A foreign business operating in India through a branch is statutorily required to adhere to GST regulations. The West Bengal Authority for Advance Ruling, in In Re: M/s IZ-Kartex named after P G Korobkov Ltd (2020 TAXSCAN (AAR) 201), ruled that if a branch of a foreign entity provides services in India, it must mandatorily register under the GST regime and pay tax under the forward charge mechanism.
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This ruling is significant as it distinguishes the nature of services provided by foreign entities. The tax liability does not fall under import-of-service provisions where the recipient in India would have paid under the reverse charge mechanism. Instead, the foreign branch itself is considered a taxable entity, thereby requiring direct GST compliance.
Businesses often maintain warehouses in different states to optimize logistics and reduce transportation costs. However, the necessity of obtaining GST registration in every state where a company has a warehouse was addressed by the Maharashtra AAR in Gandhar Oil Refinery (India) Ltd. (2019).
The ruling clarified that a business registered in one state can operate warehouses in other states without obtaining separate GST registrations. Transactions from such warehouses can be processed through the GSTIN of the head office by paying IGST in the registered state. This decision benefits companies by simplifying compliance and reducing administrative burden, allowing them to manage inter-state warehousing efficiently.
Brokerage services related to agricultural products are generally exempt from GST to support and promote the agricultural sector. However, when agricultural produce undergoes processing, the exemption may not apply. This was highlighted in the case of In Re M/s Gayatri Enterprises (2024 TAXSCAN (AAR) 125) where the Andhra Pradesh AAR examined whether brokerage services related to processed agricultural products like dehulled or split pulses qualify for GST exemption.
Read More: Brokerage of Agricultural Produce liable for GST Registration, Attracts 18% GST: AAR
The ruling determined that once an agricultural product undergoes processing that alters its essential characteristics, it ceases to be classified as ‘agricultural produce’ under GST law. Consequently, brokerage services for such items attract GST at the prescribed rate. This decision underscores the fine line between primary agricultural products and processed goods in taxation matters.
Read More: GST leviable on Brokerage Charges by Broker of Agricultural/Exempt Produce at 18%: AAR
A significant question in the realm of GST compliance arises when an importer brings goods into India and sells them from a customs warehouse located in a different state than that where their registered business is operational. The Telangana AAR, in In Re: M/s Euroflex Transmissions (India) Private Limited (2022 TAXSCAN (AAR) 167) provided clarity on this issue.
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The ruling stated that businesses importing goods and selling them from a customs warehouse do not need separate GST registration in the state where the warehouse is located. Instead, the registration obtained in another state suffices for GST compliance. This decision streamlines import transactions by ensuring businesses do not face unnecessary compliance hurdles when selling goods post-customs clearance.
Read More: GST: ITC can be claimed on IGST Paid Both on Imports Intra & Inter-State Sales, rules AAR
The landscape of GST registration in India continues to evolve through rulings by the numerous jurisdictional High Courts and various Authorities for Advance Rulings across the country addressing complex business scenarios. From allowing multiple registrations at the same address to mandating GST compliance for foreign branches the rulings provide much-needed clarity for businesses.
Businesses are required to stay informed about such rulings to ensure compliance and optimize their tax strategies in line with their best interests. GST, being a unifying tax framework aims to contribute to a more transparent and efficient tax system that facilitates ease of doing business in India, however its implementation is far-from-perfect, being modified and bettered in instances.
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