THE Central Goods and Services Tax Act, 2017 ("CGST"/ "the Act") which is promoted as bringing ease of compliance seems to introduce the burden of unnecessary compliance to the small business houses which render their services/trade in commodities mostly in the state to which they belong and only occasionally undertake transactions in other States where they are not registered. Under GST Regime a person who occasionally undertakes transaction where he has no fixed place of business shall be required to get registered in that State as well.

Under Section 22 of CGST every supplier is liable to be registered under this Act in the State or Union territory, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees (Rs. 10 lakhs for NE & Special Category States). However, section 24 provides for exceptions to the above section which means that even in the case the threshold limit of INR 20 Lakhs is not crossed the registration is obtained. One such exception is a casual taxable person.

The Act under Section 2(20) defines a casual taxable person to mean "a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business."

A casual taxable person is such taxpayer who occasionally undertakes transaction in a taxable territory (i.e., the territory to which the provisions of this Act apply) where he has no fixed place of business (i.e. a place through which the business of the supplier is wholly or partly carried on and is mentioned under the certificate of registration obtained under the Act)¹. Now what happens to exhibitors, traders etc. supplying in exhibitions or trade fairs, groups conducting plays or circus in different cities?Do they also need to get registered in all the cities where they are exhibiting their products and entering into small, may be one-time sales or transactions? Yes, atleast the intention of the Act seems so which seeks to include every person whether working as a principal or as agent or in any other capacity.

As can be seen above, the definition provides that:

a. The transaction should involve supply of goods or services;

b. The person shall not have fixed place of business in the particular taxable territory.

Section 24 of the Act provides for compulsory registration of such taxpayers in the taxable territory, and the same shall be made at least 5 days prior to the commencement of the said business.The certificate of registration issued to a casual taxable person shall be valid for a period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier, and such person shall make taxable supplies only after the issuance of the certificate of registration. The certificate is eligible for extension upon such request being made along with the deposit of an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is sought, as provided under Section27.

As if the registration burden was not enough, the causal taxpayer is also required to deposit an advance deposit of tax of an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought. In an instance, where the ultimate tax liability of the casual taxpayer is more than the estimated tax liability, he shall make a deposit towards payment of such tax by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such condition sand restrictions as may be prescribed, which shall be credited to the electronic cash ledger of such taxpayer, akin to a regular taxpayer under the Act.

Additionally, the casual taxpayer is mandatorily required to file returns as any other taxable person. Furthermore, Section 54 (13) clearly states that such taxpayer is not entitled to any refund, unless he has, in respect of the entire period for which the certificate of registration granted to him had remained in force and furnished all the returns required as prescribed under Section 39 the Act.

It does not matter whether a person is making the supply of Rs. 100/- or Rs. 1,00,000/-.The causal taxpayer is required to take registration, deposit advance tax, file return as no minimum threshold has been provided for this provision and it has been explicitly stated that the threshold provided in the Act shall not be applicable on the casual taxable person. The definition covers principal as well as agents, providing no threshold limit, making the provision applicable even on small vendors carrying out any activity on short-term basis.

In other words, all persons supplying taxable goods and services in a taxable territory shall be covered under GST regime irrespective of income earned by them.

Persons from various sectors may fall under the ambit of casual taxpayers, for instance, B2C transactions, persons conducting circus, freelance workers, people undertaking seasonal businesses, etc. In certain cases it would be determined on case to case basis, for example, an apparel boutique owner participating in an exhibition-cum-sale in another city, would fall under this category. But, if she sends the consignment from her registered store, then it would be an inter-state sale and would not require his registration as a casual taxable person.

The facts of each case will determine whether or not it would be a case of an inter-state supply or one falling in the category of supply by a casual taxable person. What happens in the instances where both the place of supply and the location of the supplier is in a territory where he doesn't have a fixed place of business? On the basis of existing provisions, it appears that registration as a casual taxable person may be required in such instances.

Another exception to a regular taxpayer under the Act is a non-resident taxpayer. A non-resident taxable person is one who occasionally undertakes transactions involved in supply of goods or services but has no fixed place of business residence in India. A key difference between a casual taxable person and non-resident taxable person is the holding of a PAN number. The former has a PAN number and the latter generally does not. But, non-resident taxpayer who has PAN number may take registration as a casual taxable person. A non-resident taxable person has to file a separate simplified return unlike a regular or casual taxpayer. The relevancy of the above provision is questionable, as why would a non- resident taxpayer want to increase its compliance requirements and formalities by registering as a causal taxpayer.

The introduction of registration of casual taxpayers could be considered as a welcome move bringing in greater transparency, preventing tax avoidance and evasion. In parallel, it would also have consequences, with not only increasing the compliance requirements but affecting the suppliers of the lower income groups in majority because of the absence of the threshold limit. Constitutionally, the concept of equality among equals is followed, upon which the progressive taxing system in India is based, in order to maintain social equality. But, the no threshold provision is contrary to the same. Therefore, an amendment to the said provision, inserting a threshold similar to that for regular taxpayers under the GST regime, could help reduce the harsh consequences such lower groups will have to face.

(The views expressed are strictly personal.)

¹ Sec. 2 (85): place of business includes–– (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or (b) a place where a taxable person maintains his books of account; or (c) a place where a taxable person is engaged in business through an agent, by whatever name called.