The Goods and Services Act (GST) is said to be one of the biggest tax reforms of the country which replaced many indirect taxes imposed by the Government such as VAT, service tax etc. The GST is a single tax levied on the supply of goods and services. It had a great impact on business sector as it encouraged the growth of small and medium scale businesses. It also made the registration process simple as only one registration under GST is required unlike older times where registration was to be done separately under every tax. After the implementation of GST, the tax evasion has also reduced and many measures have been made to lessen business fraud and malpractices.
The powers to levy and collect the taxes were delegated to Central (CGST) and State (SGST) governments as well as Union Territories (UTGST).
The registration of different business branches and business verticals are included in the Central Goods and Services Tax Act.
The Central Goods and Services Tax Act, 2017, is an act to make a provision for levy and collection of tax on supply of goods and services. As per this Act, it is mandatory for those who supply goods and services to register under GST.
What is a business branch and a business vertical under this Act?
There is no definite meaning of business branch given in the Act but in general terms, a business branch can be defined as a branch office in a location other than the main office, where same business is conducted.
The Section 18 of the CGST Act, 2017 defines business vertical as-
“business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.”
REGISTRATION OF BRANCHES WITHIN THE STATE:
There is no need for separate registration for a new branch within a state. You can modify the existing certificate and add the details of the new branch. Thus, for the addition of a new branch you need not go through the whole process of registration.
The application for the addition of new branch will be made in GST REG-14. After the verification and approval from the department, the changes will be updated accordingly.
REGISTRATION OF BRANCHES IN OTHER STATES:
If the business is conducted in different states, it is mandatory to obtain registration of each state and union territory where the goods and services are produced.
For eg. If a coffee shop is opened in the states of Maharashtra and Goa, then GST registration is to be done and obtained for the state of Maharashtra as well as Goa.
THE GSTIN FORMAT:
The structure of the GSTIN i.e. GST Identification Number format consists of a 15 digit unique code where the first two digit stands the state of registration. Thus, the first two number changes if the business takes place in two different states. The PAN number remains the same throughout. In case there is more than 1 registration in the same state, the firm code changes.
REGISTRATION OF BUSINESS VERTICALS WITHIN A STATE:
As mentioned above in the definition, a business vertical is a different part of a business which is subject to its own risk and returns. Hence, it differs with the other business verticals and has to be registered separately under the conditions laid down in the Act.
To obtain a separate GST Registration, the Act has provided certain conditions for registration of business verticals within states and union territories. It states-
(1) Any person having multiple places of business within a State or a Union territory, requiring a separate registration for any such place of business under sub-section.
(2) of section 25 shall be granted separate registration in respect of each such place of business subject to the following conditions, namely:
(a) Such person has more than one business vertical as defined in clause (18) of section 2;
(b) No business vertical of a taxable person shall be granted registration to pay tax under section 10 if any one of the other business verticals of the same person is paying tax under section 9.
(c) All separately registered business verticals of such person shall pay tax under the Act on supply of goods or services or both made to another registered business vertical of such person and issue a tax invoice for such supply.
The first necessity is that the person should have more than one business vertical within the state or union territory.
Secondly, if a business has already been registered to pay taxes under section 9, then you cannot register under the section 10 of the Act i.e. the business must not be registered to pay tax under the GST Composition Scheme.
All the separately registered business verticals must pay taxes on the supply of goods and services to another registered business vertical operating the same business and issue a tax invoice for such supply.
Now that we know about the eligibility to obtain the registration, we move on to the process of registration.
The process for obtaining registration for a new business branch or vertical is similar as that of the first registration. The registration can be done in FORM GST REG-01.
The FORM GST REG-01 is commonly applied by all the business. The next process would be the verification process after which the GST certificate would be issued in the next 7 working days. The GST Registration Certificate would include the principal place of business and the additional place. Upon registration, the new GSTIN will also be allotted with a change in entity code.
The registration under GST is one of the most essential requirement for starting or operating of a business. It would be very difficult for a business to function without a registration as collecting taxes from customers or availing tax credit from the Government would not be possible without proper registration.