Registering as a Casual Taxable Person

A trader based in one State takes a stall at a ten-day exhibition in another. The trader has no office there and will leave when the exhibition closes. Two things about GST registration come as a surprise. It must be in place before the first sale, and the tax on the expected sales must be paid before the application is even acknowledged. A registration that arrives a day after the exhibition opens does not cover the sales already made.

This guide covers the procedure for a casual taxable person. The general steps every applicant takes are in Applying for GST Registration: the Steps Every Applicant Takes. This guide adds only what is different for a casual taxable person.

Who counts as a casual taxable person

Section 2(20) of the CGST Act defines a casual taxable person as one “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”.

The test is about the State, not about India. The person usually has a business elsewhere in India. What it lacks is a fixed place of business in the State where the occasional supplies are made. A person with no fixed place of business or residence anywhere in India is a non-resident taxable person, which the next guide covers.

Section 24(ii) requires “casual taxable persons making taxable supply” to register whatever their turnover. Why the threshold does not apply, and how section 24 works generally, is explained in Who Must Register. A casual taxable person applies in FORM GST REG-01, like a regular applicant, so a Permanent Account Number is needed for Part A.

Handicraft sellers are exempt, with conditions

Notification No. 56/2018-Central Tax, issued under section 23(2), exempts some casual taxable persons from registration. It replaced Notification No. 32/2017-Central Tax from 23 October 2018. The exemption covers casual taxable persons “making inter-State taxable supplies” of handicraft goods. Handicraft goods are either those defined in Notification No. 21/2018-Central Tax (Rate), or listed products such as carved wood, pottery, handloom textiles, carpets, dolls and toys, and folk paintings, “when made by the craftsmen predominantly by hand even though some machinery may also be used in the process”.

There are three conditions:

1. The person must be using the parallel IGST exemption in Notification No. 3/2018-Integrated Tax.
2. The aggregate value of such supplies, “computed on all India basis”, must not exceed the turnover above which a supplier must register under section 22(1), read with Explanation (iii).
3. The person “shall obtain a Permanent Account Number and generate an e-way bill” under rule 138 of the CGST Rules.

A person within the exemption therefore needs a PAN and must generate e-way bills, but does not file REG-01.

The timing: five days before, and no supply before the certificate

The first proviso to section 25(1) requires a casual taxable person to “apply for registration at least five days prior to the commencement of business”. Section 27(1) adds that such a person “shall make taxable supplies only after the issuance of the certificate of registration”. The portal’s user manual notes that for a casual taxpayer the date on which liability to register arises is filled in automatically.

The advance deposit comes first

Section 27(2) requires an advance deposit “in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought”. The deposit is made when the application is submitted. Under section 27(3) it is credited to the electronic cash ledger and used under section 49. The ledger itself is explained in The Three Electronic Ledgers.

The estimate goes into item 11 of REG-01, “estimated supplies and estimated net tax liability during the period of registration”, split into integrated, central, State or Union territory tax, and cess. Circular No. 71/45/2018-GST clarified that the deposit is a net figure: it “should be calculated after considering the due eligible ITC which might be available to such taxable person”. It need not be the gross tax on the expected sales.

Rule 8(6) of the CGST Rules sets the order of events. The applicant “shall be given a temporary reference number by the common portal for making advance deposit of tax”, and the acknowledgement “shall be issued electronically only after the said deposit”. The portal’s manual describes how this works. After the estimate is entered, the applicant creates a challan and the portal generates a provisional GSTIN for it. The acknowledgement follows only once the deposit reaches the cash ledger. If a payment fails, another challan can be created. The challan is FORM GST PMT-06, which rule 87(2) makes valid for fifteen days.

The application, step by step

1. In Part A of REG-01 the applicant declares its PAN, State, mobile number and e-mail address. These are verified by one-time passwords, and the portal issues a Temporary Reference Number.
2. In Part B, on the Business Details tab, the applicant answers “Yes” to “Are you applying for registration as a casual taxable person?”. It then enters the period for which registration is required and the estimated turnover and net tax liability.
3. The applicant creates the challan and pays the deposit.
4. The other tabs are completed as for any applicant: promoters, authorised signatory, principal place of business, goods and services, and Aadhaar authentication.
5. The applicant verifies the form with a digital signature, e-signature or electronic verification code.
6. Once the deposit is in the cash ledger and the form is validated, the portal issues the acknowledgement in FORM GST REG-02, with an Application Reference Number (ARN).
7. The proper officer processes the application under rule 9. On approval the certificate is issued in FORM GST REG-06, and the provisional GSTIN becomes active.

Verification, geocoding and physical verification

Rules 9 and 25 apply as they do to any REG-01 applicant. Applying for GST Registration explains the time limits and the Aadhaar route. The point to note here is time. An applicant who does not opt for Aadhaar authentication, or who is flagged on risk parameters, is processed within thirty days instead of seven working days, after physical verification under rule 25. The officer’s report and photographs are uploaded in FORM GST REG-30. For a casual applicant who filed only five days ahead, that can mean the exhibition is over before the registration is granted.

REG-01 asks for the latitude and longitude of the principal place of business. The portal’s geocoding FAQ lists casual taxable persons among the registrants to whom geocoding of the principal place of business applies.

How long it lasts, and extending it

Under section 27(1), the certificate is valid “for the period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier”. A proviso allows the proper officer, “on sufficient cause being shown”, to extend it “by a further period not exceeding ninety days”.

Rule 15 sets the procedure. The application is made in FORM GST REG-11 “before the end of the validity of registration granted”. It “shall be acknowledged only on payment of the amount specified in sub-section (2) of section 27”, which is a further deposit equal to the estimated tax for the extension. REG-11 asks for the original validity period, the period of extension, the estimated turnover and tax for that period, and the payment details.

The maximum is therefore one hundred and eighty days. Circular No. 71/45/2018-GST dealt with exhibitions that run longer. A person in a long-running exhibition “cannot be treated as a CTP” and must register as a normal taxable person. The allotment letter or consent letter for the exhibition premises is accepted as proof of the place of business, and no advance tax is required. The person can surrender the registration once the exhibition is over.

Returns and the leftover deposit

Rules 59 and 61 exclude several categories of registrant from FORM GSTR-1 and FORM GSTR-3B, but not casual taxable persons. A casual registrant therefore files both returns for the period of registration, as explained in GSTR-1 and GSTR-3B, and pays tax from the advance deposit in its cash ledger. Section 10 excludes casual taxable persons from the composition scheme.

Any deposit left over is not refunded automatically. Under section 54(13), it “shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39”. Once that condition is met, rule 89(1) allows an application for refund of “any balance in the electronic cash ledger”.

Document checklist

The list is in REG-01 itself. File limits are as stated in the portal’s user manual.

Document	Provided by	Format and limit (portal manual)
Photograph of each proprietor, partner, Karta, director or equivalent named in the form	Applicant	PDF or JPEG, 100 KB
Proof of appointment of authorised signatory: the authorisation or board or committee resolution, with an acceptance, in the format annexed to REG-01	Business and the signatory	PDF or JPEG, 1 MB
Photograph of authorised signatory	Signatory	100 KB
Proof of principal place of business. For owned premises: property tax receipt, municipal khata or electricity bill. For rented or leased premises: rent or lease agreement with an ownership document of the lessor. Otherwise: consent letter with an ownership document of the consenter	Applicant, landlord or consenter	PDF or JPEG, 1 MB
Proof of constitution (partnership deed, registration certificate) where applicable	Applicant	not stated
Bank account proof (passbook first page, statement or cancelled cheque), where bank details are given	Applicant	not stated
Challan identification number for the advance deposit	Generated on payment	entered in the form

Forms involved

• FORM GST REG-01: the application, with the casual option at items 9 to 11.
• FORM GST PMT-06: the challan for the advance deposit.
• FORM GST REG-02: the acknowledgement, issued only after the deposit.
• FORM GST REG-03 and REG-04: the officer’s query and the applicant’s reply, if any.
• FORM GST REG-30: the physical verification report, where rule 25 applies.
• FORM GST REG-06: the certificate.
• FORM GST REG-11: the application to extend the period.
• FORM GSTR-1 and FORM GSTR-3B: the returns.
• FORM GST RFD-01: the refund of any balance in the cash ledger.

Declarations, consents and authorisations

Prescribed by REG-01 itself:

• the Aadhaar consent at item 26
• the verification by the authorised signatory at item 27, that the information “is true and correct”
• for each authorised signatory, a declaration signed by the proprietor, partners, directors or committee members, with the signatory’s acceptance

Required by the REG-01 document list:

• a consent letter where the premises are neither owned nor rented
• where there is no rent or lease agreement, “an affidavit to that effect along with any document in support of the possession of the premises”

Asked for by the portal in practice: the portal’s manual for non-resident applicants accepts a rent receipt with a no-objection certificate where an agreement is absent or expired. The exhibition allotment letter is a document named by Circular No. 71/45/2018-GST, but only for the long-running-exhibition case it addresses.

The procedure in summary

1. Check whether the handicraft exemption in Notification No. 56/2018-Central Tax applies. If it does, obtain a PAN and generate e-way bills instead of registering.
2. At least five days before the first supply, complete Part A of REG-01 and obtain the Temporary Reference Number.
3. In Part B, select the casual option, state the period (ninety days at most) and enter the estimated net tax liability.
4. Pay the advance deposit through the challan against the provisional GSTIN.
5. Upload the documents, complete Aadhaar authentication and verify the form. The acknowledgement and ARN issue once the deposit is in the cash ledger.
6. Answer any query in REG-04 and allow for physical verification. Make no taxable supply until REG-06 is issued.
7. If more time is needed, file REG-11 with a further deposit before the validity ends. One extension of up to ninety days is possible.
8. File GSTR-1 and GSTR-3B for the whole period, then claim any balance in the cash ledger as a refund.

The next guide covers the parallel procedure for a supplier with no fixed place of business or residence in India: Registering as a Non-Resident Taxable Person.