- Whether registration is necessary for the person who is executing business of exempted goods ?
A person , who is executing business of exempted goods only, is not required to take registration in the GST regime as per the provisions embodied in section 23 of the SGST Act, 2017 and CGST Act, 2017 . However the provisions of section 24 of the aforesaid Acts shall apply in case of such person also .
It is pertinent to note that a person who has liability to pay tax on reverse charge basis is required to get himself registered as per the provisions embodied in section 24 of the SGST Act , 2017 and CGST Act, 2017. In this case the requisite of registration is mandatory irrespective of the quantum of turnover .
Tax on reverse charge basis means the tax to be paid by the recipient of the goods or services or both instead of the supplier of the goods or services or both . Its simplest example is the case where the purchases are executed or the supplies are received form an unregistered person.
2. Whether a person who executes supplies of exempted goods but has liability on the reverse charge basis shall get the benefit of ITC ?
Ans: No ! ITC can only be claimed in respect of inputs pertaining to taxable supplies or zero rated supplies and cannot be claimed as against exempted supplies . It is abundantly clear from the provisions embodied in sub-section (2) of section 17 which reads as follows :
“(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempted supplies under the said Acts , the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies . “
It is also pertinent to note that zero-rated supplies shall mean supplies in the course of exports and supplies made to the SEZ units or SEZ developers . ( Section 16 of the IGST Act , 2017)
3. Whether a person who is not going to get any ITC of the tax paid on reverse charge basis, being the supplier of exempted goods , should get himself registered ?
Any person who is liable to pay tax on reverse charge basis has to get himself registered as per the provisions embodied in section 24 of the SGST Act, 2017 and CGST Act , 2017 . He is not at liberty or discretion so far as registration is concerned . He has to get himself registered and it is a legal requisite which he has to comply with .
4. If ITC in respect of reverse charge is not admissible or available to the person executing exempted supplies then what is the point in getting such person registered ?
Registration and ITC are two different concepts . To get ITC registration is a must but merely because someone is registered ITC does not become suo moto admissible or available . There are many exceptions and circumstances where a registered person is not allowed ITC . Thus these two things cannot be mingled together .Sub-section (5) of section 17 discusses these circumstances where ITC is not admissible or available .
5. If no ITC is admissible to the persons executing exempted supplies in respect of the tax paid on the basis of reverse charge , then it shall become very difficult for such persons to carry out business ?
Even in the VAT regime the dealers executing purchases of taxable goods from the unregistered persons are required to pay tax on such purchases and no ITC is admissible to them in respect of such purchases if they use such goods in the sale of exempted commodities .