DECEMBER 06, 2016

By Nitesh Kancharla and Krithika Jaganathan

ON November 08, 2016, the GST Portal (www.gst.gov.in) was made operative to initiate the process of enrolment of Assessees registered under the existing regime. Designed and developed by the GST Network ('GSTN') with an aim to validate the information already available in the database and to concurrently facilitate the smooth migration of Assessees' registrations from the current system to GST, the portal also displays a Schedule as per which States and Territories are to execute such data validation. The present article attempts an insight into the statutory force under which the GST Portal was made operative through a comparative jurisprudence of how, if at all, early-bird registrations were undertaken in other GST jurisdictions.

The Model GST Law conceives a system whereby the existing database is validated by the time the law is implemented. Section 23 of the Revised Model GST Law ('Model Law') provides that registration has to be obtained by every person who is liable to be registered under Schedule V of the Model Law. Section 166 of the Model Law stipulates that all persons registered under the existing laws shall be issued a provisional certificate of registration on the effective date of implementation of GST. Rule 14 of the Draft Goods and Services Tax- Registration Rules, 20xx, approved by the GST Council on September 30, 2016 reiterates that every person registered under the existing tax regime and in possession of a valid PAN will be granted provisional registration.In this context, the GSTN sought to issue provisional User IDs and passwords to dealers upon validation of information sought for on the commercial taxes website of the State in which they are presently registered to pay VAT. In compliance with the Schedule uploaded, jurisdictional Commissioners have issued circulars, user guides and FAQ manuals. Nonetheless, those dealers who miss the chance to complete the validation process within the time frame allotted to that State may still do so by January 31, 2017.

A recapitulation of how migration of registrations was undertaken in foreign jurisdictions is helpful.

- New Zealand : The Goods and Services Tax Act, 1985 was enacted on December03, 1985 and implemented with effect from October 01, 1986. However, registrations began in early 1986. Therefore, the scheme for registrations under GST, whether for persons already registered to discharge tax under the regime in force prior to the implementation of the Act, or for persons required to register under the new regime, commenced even before the GST law was implemented. Thus, even a country approximately 12 times smaller in size than India had recognized the need to initiate migration of registrations in a phased manner so as to ease the nation into the new system of taxation.

- Australia : As a precursor to the introduction of GST in Australia, the Australian Government enforced 'A New Tax System (Goods and Services Tax Transition) Act 1999' ('Transition Act'), with effect from July 09, 1999 to deal with the transition from sales tax to GST, as well as other matters relating to the start of GST. Section 9 of the Transition Act enabled registrations to be granted prior to the effective date of implementation of GST in Australia by empowering the Commissioner to determine the date on which provisions relating to registration became operative. In terms of Section 9, it was believed necessary to commence the legislation dealing with registration (not restricted only to existing tax payers) in November 1999, i.e., 8 months before effective commencement of GST [July01, 2000]. On account of the overwhelming volume of registrations sought prior to the implementation of GST, the Commissioner took to issuing 'interim registrations'.

- Malaysia : To ensure smooth implementation of GST upon its coming into force on April 01, 2015, business entities in Malaysia were encouraged to apply for early registration from June 01, 2014 itself. In pursuance of the same, the Royal Malaysian Customs Department (RMCD) announced an electronic service by way of The Tax Payer Access Point ('TAP') to facilitate existing taxpayers and the public to be registered under GST. TAP works in a similar fashion to GSTN in India.

It is noteworthy that the GST Portal in India seeks to formalise enrolment applications of taxpayers already registered with the Revenue; while early-bird registrations in other GST jurisdictions were open even to new entities seeking fresh registration under GST. Additionally, a key point for discussion is in respect of the source of the Commissioners' powers to request taxpayers to obtain their provisional IDs.The GSTN, akin to TAP as designed by the Malaysian Government, is a National Information Utility ('NIU') for providing IT infra structural services to the Centre, States, taxpayers and other stakeholders in the implementation of GST. As a Private Company set up under the aegis of the Technology Advisory Group for Unique Projects ('TAGUP'), can the GSTN prod the Commissionerate(s) to initiate a process without formal backup by way of a transitional legislation? Finally, what are the consequences, if any, that befall those dealers not registered for GST before its effective date of implementation? No repercussions are imminent from the GST portal, though Circular No. 9/2016 dated October 13, 2016 issued by the Office of the Commissioner of Taxes, Assam cautions that if the data is not validated as on November 05, 2016, 'such' dealers will be disabled from uploading tax returns and/or applying for statutory forms under their existing registration. Adding to the woes of Assessees, if registration is granted on or after the appointed date for implementation of the Act, the Assessee(s) ought to have their systems updated so they may begin GST-compliances by issuing tax invoices from day 1 of implementation of GST. Therefore, considering the size of the population in India and its history of rank tax avoidance coupled with evasion, the requirement of getting a head start on the registrations front cannot be over-emphasized.

(The authors are Principal Associate and Associate with Lakshmikumaran & Sridharan, Hyderabad and the views expressed are strictly personal)