DEEMED REGISTRATION UNDER CENTRAL GOODS AND SERVICES TAX ACT, 2017

[Mr. M. GOVINDARAJAN]

Registration

Section 22 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides for registration by every supplier under the Act.  This section provides the threshold amount of taxable supply for the purpose of registration.  Section 23 provides the list of persons who are not liable for registration under the Act.  Section 24 provides the list of category of persons who are compulsorily required to be registered under the Act.

Procedure for registration

Section 25 of the Act provides the procedure for registration under the Act by the supplier who is liable to be registered under the Act.  The procedure of registration is as discussed below-

• Every person who is liable to be registered shall apply for registration in every such State or Union territory in which he is so liable within 30 days from the date on which he becomes liable to registration.
• Such person  shall, before applying for registration, declare his Permanent Account Number, mobile number, e-mail address, State or Union territory in Part A of FORM GST REG-01 on the common portal.
• The Permanent Account Number shall be validated online by the common portal from the database maintained by the Central Board of Direct Taxes.
• The mobile number declared shall be verified through a one-time password sent to the said mobile number.
• The e-mail address declared shall be verified through a separate one-time password sent to the said e-mail address.
•  On successful verification of the Permanent Account Number, mobile number and e-mail address, a temporary reference number shall be generated and communicated to the applicant on the said mobile number and e-mail address.
• Using the reference number generated under sub-rule (3), the applicant shall electronically submit an application in Part B of FORM GST REG-01, duly signed or verified through electronic verification code, along with the documents specified in the said Form at the common portal.
• On receipt of an application an acknowledgement shall be issued electronically to the applicant in FORM GST REG-02.
• The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of three working days from the date of submission of the application.
• Where the application submitted is found to be deficient, either in terms of any information or any document required to be furnished  or where the proper officer requires any clarification with regard to any information provided in the application or documents furnished therewith, he may issue a notice to the applicant electronically in FORM GST REG-03 within a period of 3 working days from the date of submission of the application and the applicant shall furnish such clarification, information or documents electronically, in FORM GST REG-04, within a period of 7 working days from the date of the receipt of such notice.
• Where the proper officer is satisfied with the clarification, information or documents furnished by the applicant, he may approve the grant of registration to the applicant within a period of 7 working days from the date of the receipt of such clarification or information or documents.
• Where no reply is furnished by the applicant in response to the notice or where the proper officer is not satisfied with the clarification, information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05.
• Where the application for grant of registration has been approved, a certificate of registration in FORM GST REG-06 showing the principal place of business and additional place or places of business shall be made available to the applicant on the common portal and a Goods and Services Tax Identification Number shall be assigned.

Deemed Registration

Section 26 provides that the grant of registration or the Unique Identity Number under the State Act or the Union Territory GST Act shall be deemed to be a grant of registration or the Unique Identity Number under this Act subject to the condition that the application for registration or the Unique Identity Number has not been rejected under this Act within the time specified 25 (1).

If the proper officer fails to take any action, -

•  within a period of 3 working days from the date of submission of the application; or
• within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant

the application for grant of registration shall be deemed to have been approved.

In ‘West Bengal Lottery Stockists Syndicate Private Limited v. Union of India’ – 2019 (5) TMI 1396 - KERALA HIGH COURT the petitioner applied for registration under the Act and KGST Act.  The petitioner uploaded the application on 16.01.2019.  The petitioner received a notice on 31.01.2019 seeking additional information for registration stating the following reasons-

• Documents to prove the ownership of the business premises and bank details of the directors are not uploaded;
• The application is for registration to deal lottery services but the documents enclosed are to prove that the petitioner is authorized to deal the lottery services under various provisions of law for which authorization to deal with the lottery service is sought.

The petitioner was directed to submit their reply by 08.02.2019.  The Registering Authority issued an order rejecting the petitioner’s application stating that reply has not been found satisfactory and also the application is not in accordance with the provisions of the Act.

The petitioner challenged the said order in the High Court through this writ petition.  The petitioner submitted the following before the High Court-

• If the officer fails to take steps within 3 working days from the date of submission of the application, the petitioner is entitled for deemed registration.
• The application cannot be rejected on any factors outside the scope of GST Act and Rules.  But the Registering Authority needed to produce authorization to deal with the lottery services under various statutory provisions.
• No communication has been received from the Registering Authority within the time limit for additional information.
• There are different modes of communication enumerated under section 169 and therefore the Department also could have sent communication through email provided in the application.

The Department submitted the following before the High Court-

• They have generated response on 18.01.2019 pointing out the defects.
• Therefore deeming provision will not come to the aid of the petitioner.
• The technical snag involved is a matter purely beyond the control of the Department and what is required on their side is only taking steps.  Once steps are taken, legal fiction on deeming could not arise.

The Department also produced the documentary evidence on technical snag.

The High Court observed that the officer concerned must be very prompt in taking the action for registration.  The outer limit of 3 days for the grant of registration is fixed to secure the above purpose.   In this case there is an attempt on the part of the officer concerned to intimate the defects exist in the application and the same could not be communicated to the applicant on account of a technical snag.  

The deeming provision has to be interpreted strictly as it creates legal fiction.  If the officer had taken steps within three days, the applicant cannot have an advantage of deeming provision even though the applicant had not received such communication.  The deeming provision does not stipulate that deeming would arise if the communication is not received by the applicant within 3 days.  There the High Court held that the petitioner cannot have an advantage of deeming registration.

The High Court has set aside the reason enumerated by the Department in point no.2 of the notice. The petitioner will have to satisfy all other relevant materials like proving ownership of business through such documents which may be required and also such details which they may be required to be furnished under the Act.   The High Court directed the Department to reconsider the case and fresh decision may be taken in accordance with the Act and rules on submitting the application by the petitioner.    The High Court further held that the previous rejection of the application will not stand in the way of the petitioner in filing a fresh application.