Page 21 - Chapter 10 Registration

was ` 60 lakhs. Happy Ltd. purchased additional machinery (Capital Goods) for register within 30 days from 01.12.20XX (the date on which its supplies became
manufacturing "Shine & Shine" on 1st April, 20XX. The invoice for supply of taxable) as its turnover had already exceeded the threshold limit of ` 40 lakh on
machinery also was issued on 1st April, 20XX. The purchase price of the 01.12.20XX.
machinery was ` 25 lakh exclusive of CGST and SGST @ 12% (6% + 6%). On 1st (ii) As per section 17 of the CGST Act, the input tax credit (ITC) on capital goods

December, 20XX exemption available on the product "Shine & Shine" was used or intended to be used exclusively for effecting exempt supplies is
withdrawn by the Central Government and CGST and SGST @18% (9% + 9%) disallowed.
was imposed thereon. The turnover of Happy Ltd. on 30th September, 20XX was However, where an exempt supply by a registered person becomes a
` 45 lakh. taxable supply, such person gets entitled to take proportionate ITC on such

Examine the issue and provide the answers (with supporting explanatory note for capital goods in terms of section 18(1)(d) of CGST Act, 2017. Thus, a non-
each answer) to the following: registered person cannot take ITC on capital goods under this provision.
(i) Does Happy Ltd. have to register under CGST Act, 2017? Further, a person who has applied for registration within thirty days
(ii) Can Happy Ltd. take Credit of tax paid on the machinery purchased? If yes, from the date on which he becomes liable to registration and has been granted Ch10
what is the amount of Input Tax Credi t (ITC) that can be availed? (CA Final such registration is also not entitled to take ITC on capital goods held with him
Exam Nov 18 New)(CA Final RTP Nov 19) on the day immediately preceding the date from which he becomes liable to pay

Answer:- tax in terms of section 18(1)(a) of CGST Act, 2017.
(I) As per section 22 of the CGST Act, 2017, a supplier is liable to be registered under In the given case, Happy Ltd. is not registered at the time when its Registration
GST in the State/ UT from where he makes the taxable supply if his aggregate exempt supply becomes taxable. Thus, the company cannot take proportionate
turnover in a financial year(FY) exceeds ` 20 lakh in such State/UT (` 10 lakh in a ITC on capital goods as mentioned above. Further, the company will also not be
Some Special Category State Manipur, Mizoram, Nagaland and Tripura). entitled for credit on capital goods held with it when it applies for registration in

Provided that, any person, who is engaged in exclusive supply of goods the prescribed manner.
and whose aggregate turnover in the financial year does not exceed 40 lakh rupees
are exempt from registration. Subject to certain conditions given for being eligible CCP 10.09.38.00
to the higher threshold limit. Decide with reason whether the registration is required under CGST Act, 2017 in
The term ‘aggregate turnover’ includes exempt turnover also. the following independent cases:
However, a person exclusively engaged in making exempt supplies is (I) A casual taxable person (CTP) has provided inter-State supply of notified

not liable to registration in terms of section 23(1) of CGST Act, 2017. products being textiles hand printing amounting to ` 19.25 lakh during the
In view of combined reading of above provisions, although the month of January, 20XX. Those products were made by craftsmen by both
‘aggregate turnover’ of Happy Ltd. exceeds the applicable threshold limit of ` 40 hand and machines equally. CTP had obtained PAN and generated e-way
lakh on 30.09.20XX [` 45 lakh], it was not required to be registered till 30.11.20XX bill for supply.
as it supplied only exempted goods till that day. Therefore, Happy Ltd. needs to (ii) Mr. Bantu of Delhi doing trading business across India and his intra-State

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