Analysis
Apart from certain agriculturists, persons engaged exclusively in the supply of exempted goods or services or both are the ones not liable to obtain registration. The term exclusive indicates engaging in only those supplies which are exempted. Therefore, if a supplier is supplying both exempted and non-exempted goods and/or services, then this provision is not applicable and he is required to obtain registration under Section 22. As per Section 2(7), agriculturist means an individual or HUF who undertakes cultivation of land:
(a) By own labour or
(b) By the labour of family, or
(c) By servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family
Thus, an agriculturist is not liable for registration only to the extent of supply of produce out of cultivation of land. If an agriculturist undertakes supplies which are not linked to the cultivation of land, he will fall within the provisions of Section 22 and may have to take registration in respect of such supplies. It is important to consider the nature of activities undertaken by the agriculturist. If the process deviates from ‘cultivation’ it will travel outside the scope of this exclusion from registration. The exclusion states – to the extent of supply of ‘produce out of cultivation’ of land – any further processing of the primary produce from cultivation will continue not avail this exclusion.
Cultivation of land does not include pisciculture on inland water body or cattle rearing that graze the produce of land. The produce from emerge from land for it is be ‘cultivation of land’. For example, harvesting paddy is cultivation but production of rice is not.
Please note that the exclusion from the requirement to be registered does not result in non – collection of tax on agricultural produce. Where the supplier is not registered (for any reason) and the recipient is registered, then tax is payable by such registered recipient as per section 9(4) of CGST Act and 5(4) of IGST Act.
Further, this section also permits any person whose ‘entire’ supply consists of ‘exempt supplies’, then such person is excluded from obtaining registration. Care should be taken to validate the premises about (a) entire supply (b) exempt. Even if small value of supplies is taxable, then even exempt supplies will be included to determine if aggregate turnover has exceeded the threshold limit under section 22 for attracting registration. Also, if inward supplies liable to reverse charge under section 9(3) of CGST Act is attracted, then notwithstanding the exclusion under section 23, registration will need to be obtained compulsorily under section 24. Reference may be drawn here to the Advance Ruling passed by the West Bengal Advance Ruling Authority which states that compulsory registration would be required for a person engaging in provision of exempt supplies if he procures supplies liable to reverse charge under section 9(3) of CGST Act or 5(3) of the IGST Act, 2017. If a person remains outside the requirements of registration due to this section, he would not be liable to pay tax under 9(4) of CGST Act as it does not apply to an unregistered-recipient. Notified persons may also be granted an exemption from registration. In this regard, the Government has exempted the following persons from obtaining registration:
(a) Job-workers engaged in making inter-State supply of services to a registered person except those who are liable to be registered u/s 22(1) of the CGST Act, 2017 or persons opting for voluntary registration or persons engaged in making supply of services in relation to Jewellery, goldsmiths’ and silversmiths’ wares and other articles (w.e.f. 14.09.2017) – Notification No. 7/2017 – Integrated Tax dated 14.09.2017.
(b) Persons effecting inter-State taxable supplies of handicraft goods – where the aggregate value of supplies on PAN-India basis does not exceed 20 Lakh in a year (10 Lakh for Special Category States) – (w.e.f. 14.09.2017) – Notification No. 8/2017 – Integrated Tax dated 14.09.2017.
(c) Persons effecting inter-State supplies of taxable services – where the aggregate value of supplies on PAN-India basis does not exceed 20 Lakh in a year (10 Lakh for Special Category States) (w.e.f. 13.10.2017) – Notification No. 10/2017 – Integrated Tax dated 13.10.2017.
(d) Persons providing services through an e-commerce platform, provided their aggregate turnover does not exceed Rs. 20 lakh (Rs. 10 lakh in special category States except J & K) and the supplier is not liable to collect tax at source under GST (w.e.f. 15.11.2017). – Notification No. 65/2017 – Central Tax dated 15.11.2017