Taxation

Are you a Casual Taxable Person under GST? Know what provisions are applicable to you.

Despite holding a fixed place of business, there are instances where a person conducts his business at a place where there is no fixed business spot. His business may be regular in nature, but he may make extraordinary arrangements for selling his products or services at a different place on some occasions. The CGST Act^[1] has penned down certain peculiar obligations to be complied with by such persons. In this article, the following aspects will be touched with respect to the taxability of casual taxable persons:

What is ‘casual taxable person’?

A CTP has been defined in Section 2 (20) of the CGST/SGST Act meaning “a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business, whether as principal or agent or in any other capacity, in a State or a Union territory where he has no fixed place of business“.
Thus, a person shall be regarded as CTP if he undertakes the supply of goods or services or both:

• Occasionally, and not on a regular basis; and
• Either as a principal or agent or in any other capacity; and
• In a State/Union Territory where he has no fixed place of business

Examples of Casual Taxable Person

1. Supplies made in trade fairs by a trader, businessman, or service provider where such sale is made in a State (Gujarat) different from the State of his fixed place of business (Rajasthan).
Such a person will be required to obtain a temporary GST registration in Gujarat under the capacity of CTP before initiating sales in Gujarat.

2. A jeweller carrying on a business in Haryana, who executes an exhibition-cum-sale in Delhi where he has no fixed place of business.
Such a person will be required to obtain a temporary GST registration in Delhi before initiating sales in Delhi.

3. A person providing secretarial consulting services in Tamil Nadu and having a fixed place of business in Uttar Pradesh.
He will be required to obtain a temporary registration as CTP in Tamil Nadu before offering services in Tamil Nadu.

Registration

A CTP is mandatorily required to take registration under GST for his taxable supplies made in India. However, there is no threshold limit for registration. The casual taxable persons are required to apply for GST registration minimum 5 days before the commencement of business. The temporary registration is sought in the State where the casual taxable person intends to make supplies at irregular intervals. Moreover, he cannot take the benefits of composition scheme.

Are you applying for registration as Casual Taxable Person?

The below-mentioned procedure is to be followed for obtaining registration as a CTP:

1. For registration, a casual taxable person is required to fill the normal form ‘GST REG-01’ as used by other taxable persons.
2. While applying for registration on the GST common portal, he needs to give details of his PAN, mobile number, e-mail address, State or Union territory, etc. in Part A of FORM GST REG-01.
3. The PAN, mobile number, and e-mail address of the applicant shall be validated online, and cross-verified from the CBDT’s database maintained on the common portal.
4. On successful verification of the applicant’s details, a temporary reference number will be generated and sent to him on the stated mobile number and e-mail.
5. By using such temporary reference number, the applicant needs to submit an application electronically in Part B of FORM GST REG-01, as accompanied by prescribed documents and duly signed or verified through a verification code.
6. By using the temporary reference number, the applicant needs to deposit an advance tax as equivalent to his estimated tax liability. Only after such deposit of tax in the electronic cash ledger, he shall be issued a registration certificate electronically.
7. Only after the issuance of the registration certificate, the CTP can make taxable supplies.

Period of validity of registration

Section 27(1) describes the period for which the GST registration certificate granted to a casual taxable person or non-resident taxable person shall be valid. It says that the certificate of registration issued to a CTP is valid for such period as may be specified in the application for registration or 90 days from the date of registration, whichever is earlier. However, such taxable person may request the concerned officer to extend the period of validity by a further period not more than 90 days. For extension of such registration, an application in FORM GST REG-11 is to be made.

Advance deposit of tax

At the time of submitting an application for registration under a special category, the CTP is required to pay an advance tax, as opposed to a normal taxable person. Pursuant to Section 27(2), such advance tax is equal to the estimated GST liability pertaining to the period for which the registration is sought. Moreover, where the period of registration is extended beyond the initial 90 days, an additional amount of advance tax is required to be deposited for the tax liability likely to arise in such an extended period. The extension will be granted only after the payment of additional advance tax.

Which returns are to be furnished by a CTP?

A casual taxable person under GST is required to furnish the following GST returns:

• FORM GSTR-1 showing information of outward supplies of goods or services: This return is to be filed on or before the 10th of the succeeding month.
• FORM GSTR-2 showing information of inward supplies of goods or services: This return is to be filed after 10th but before 15th of the succeeding month.
• FORM GSTR-3 showing final tax liability: This return is to be filed after 15th but before 20th of the succeeding month.

It is to be noted that unlike a normal registered person, a CTP shall not be required to furnish GST annual return.

Refund of tax

After adjustment of the casual taxable person’s tax liability against the amount of advance tax deposited, he shall be entitled to receive a refund of the balance. Such refund of advance tax will be allowed only if all returns have been furnished with regard to the registration period opted by the CTP. Such refund of the balance amount in the electronic cash ledger is to be made in serial no. 14 of the last FORM GSTR-3 return.

Reverse charge mechanism on CTP

As per Section 9(3) of the CGST Act, 2017, “in case of supply of services by a goods transport agency (GTA) in respect of transportation of goods by road to any CTP located in taxable territory, the recipient of service (CTP) located in taxable territory is liable to pay GST”.

Takeaway

A casual taxable person is provided special treatment under the GST provisions. A CTP is required to obtain compulsory registration on a temporary basis in the State of occasional supply of goods or services, irrespective of his aggregate annual turnover. It is worth bearing in mind that he is precluded from undertaking his business in the other State unless he applies for a temporary registration before 5 days of commencing activities there.