Understanding the Concept of Casual Taxable Person under GST

Introduction

Goods and Services Tax (GST) in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. Among the various classifications of taxpayers under GST, one unique category is that of the Casual taxable person (CTP). This article delves into the concept of a Casual taxable person, its necessity, registration process, specific provisions under the CGST Act and Rules, and other related aspects.

Concept of Casual Taxable Person and Its Necessity

A Casual taxable person (CTP) is defined under Section 2(20) of the CGST Act, 2017. A CTP is someone who occasionally undertakes transactions involving the supply of goods or services or both in a Taxable territory where they have no fixed Place of business. This includes individuals or businesses that come to an event, exhibition, or a trade fair in another state or location for a limited period to make supplies.

Why is it Needed?

The concept of a CTP is crucial for several reasons:

1. Tax Compliance: Ensures that individuals or entities making occasional supplies in a territory comply with GST laws.

2. Revenue Assurance: Helps the government in capturing and ensuring tax on supplies that are made on an occasional basis.

3. Level Playing Field: Provides a level playing field by bringing all suppliers under the tax net, even if they do not have a permanent establishment in the Taxable territory.

Registration Process for a Casual taxable person

Application Procedure

According to Section 25 of the CGST Act and Rule 8 of the CGST Rules, 2017, the registration process for a CTP involves the following steps:

1. Advance Application: A CTP must apply for registration at least five days before commencing business.

2. Form Submission: The application must be made electronically in Form GST REG-01.

3. Temporary Registration: The CTP is granted a temporary registration, which can be tracked through the GST portal.

Time Duration and Extension

A CTP`s registration is valid for a period specified in the application or 90 days from the effective date of registration, whichever is earlier. As per proviso to Section 27(1) of the CGST Act, the period can be extended by another 90 days upon request, subject to the approval of the Proper officer.

Specific Provisions under the CGST Act and Rules

Section 25 and Rule 8

• Section 25(1) of the CGST Act: Mandates that every person liable to be registered under the Act shall apply for registration in every such State in which they are so liable within thirty days from the date on which they become liable to registration. However in case of Casual taxable person taxpayer is required to apply for registration at least 5 days prior to the commencement of business:

• Rule 8 of the CGST Rules, 2017: Details the procedure for submitting an application for registration.

Deposit of Tax Before Registration

According to Section 27(2) of the CGST Act, a CTP must deposit an amount equivalent to the estimated tax liability for the period for which registration is sought, in advance. This deposit acts as a security and ensures compliance. Where extension of time limit is sought by the Casual taxable person he shall be required to again deposit an amount equivalent to the estimated tax liability at the time of making an application for extension of time in accordance with proviso to Section 27(2).

Refund of Advance Tax

In cases where the registration is not granted or the amount deposited is not fully utilized, the CTP has following alternatives:

• Refund Process: The unutilized amount of tax deposited by the CTP into it’s Electronic cash ledger can be claimed as a refund under Section 54 of the CGST Act.

• Transfer of amount via PMT-09: Instead of claiming a refund, the taxpayer can opt to transfer the unutilized amount to another GSTIN under the same PAN, which can be a more efficient use of funds.

PMT-09 is a challan for transferring any amount of tax, interest, penalty, fee, or any other amount available in the Electronic cash ledger to the correct tax head. It allows taxpayers to shift their balances from one head to another within the same GSTIN or across different GSTINs under the same PAN.

Steps to Transfer Unutilized Amount

1. Login to GST Portal: Access the GST portal and log in with your credentials.

2. Navigate to Services: Go to `Services` > `Ledger` > `Electronic cash ledger`.

3. File Form PMT-09: Select `File GST PMT-09 for transfer of amount` option.

4. Enter Details: Input the details of the amount to be transferred, including the major and minor heads of tax (e.g., IGST, CGST, SGST) and the GSTIN to which the amount should be transferred.

5. Submit Form: After filling in the required details, submit the form.

Conditions and Restrictions- The transfer can only be made to GSTINs registered under the same PAN.

Notifications and Circulars

Following circulars provide additional clarity and guidelines for CTPs:

• Circular No. 10/10/2017-GST:

Subject: Clarification on issues wherein the goods are moved within the State or from the State of registration to another State for supply on approval basis –Reg.

Various communications have been received particularly from the suppliers of jewellery etc. who are registered in one State but may have to visit other States (other than their State of registration) and need to carry the goods (such as jewellery) along for approval. In such cases if jewellery etc. is approved by the buyer, then the supplier issues a tax invoice only at the time of supply. Since the suppliers are not able to ascertain their actual supplies beforehand and while ascertainment of tax liability in advance is a mandatory requirement for registration as a Casual taxable person, the supplier is not able to register as a Casual taxable person. It has also been represented that such goods are also carried within the same State for the purposes of supply.

Clarifications Provided:

• Goods taken for supply on approval basis can be moved from the Place of business of the registered supplier to another place within the same State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice may be issued at the time of delivery of goods.

• All such supplies, where the supplier carries goods from one State to another and supplies them in a different State, will be inter-state supplies and attract integrated tax in terms of Section 5 of the Integrated Goods and Services Tax Act, 2017.

• Circular No. 71/45/2018-GST: Clarifies the issues related to registration, deposit of tax, and refunds for CTPs.

Conclusion

The concept of a Casual taxable person under GST is designed to ensure that even those without a fixed Place of business but who occasionally supply goods or services are brought into the tax net. The registration process, along with the advance deposit of tax, ensures compliance and revenue collection. Understanding these provisions is crucial for businesses and individuals who plan to undertake occasional transactions in different taxable territories. The CGST Act and Rules, supplemented by notifications and circulars, provide a comprehensive framework for managing the tax obligations of Casual taxable persons.