GST Applicable on consideration received in Any Form, be it cash or UPI: Karnataka CTD
State’s Commercial Taxes Department sent GST notices to over 14,000 unregistered traders in Karnataka mainly in Bengaluru and Mysuru, who had UPI transactions exceeding Rs 40 lakh in the financial year.
In protest, unregistered traders have made a new forum under the Karnataka Karmika Parishat (KKP) and announced a two-day strike on July 23 and 24, followed by a statewide shop closure on July 25. This circumstance has created panic in the market. The Karnataka government introduced the “Know GST” campaign, an initiative aimed at creating awareness and easing trader concerns.
Registration under GST:
Under the Goods and Services Tax (GST) regime, registration is a key regulatory mandate. Section 22 of the Central Goods and Services Tax (CGST) Act, 2017 explains the threshold limits for mandatory registration of suppliers based on their aggregate turnover.
Who is eligible to register under GST?
Section 22 mentions that, Every supplier is required to acquire GST registration in the State or Union Territory from where they made taxable supplies of goods and services if their aggregate turnover in a financial year exceeds Rs 20 lakhs.
Enhanced Threshold for Exclusive Supply of Goods:
The government may increase this limit to Rs 40 lakhs for suppliers exclusively engaged in the supply of goods, subject to prescribed conditions. Karnataka is among the states that have adopted this increased threshold. But, it is important to note that this Rs 40 lakh threshold does not apply to suppliers dealing in specific mentioned goods such as ice cream, pan masala, and tobacco products—items typically sold in small retail or kirana stores. Businesses must carefully verify their aggregate turnover and the nature of goods supplied to determine their eligibility under the increased limit.
Assessment of Unregistered persons under GST:
It is very important to know the relevant provisions under the GST law that empower tax authorities to issue notices. Section 63 of the CGST Act, 2017 deals with the assessment of unregistered persons.
Section 63 of the CGST Act r/w rule 100 of the CGST Rules, 2017 provides that:
- If a person is eligible to register under GST but fails to do so, or
- Then, the GST officer can estimate the tax due and pass an assessment order based on their best judgement.
- This assessment must be completed within 5 years from the due date of filing the annual return for the year in question.
- Before passing any order, the officer must give the person a chance to be heard.
- The proper officer is required to issue a notice in Form GST ASMT-14, clearly stating the grounds for proposing assessment on a best judgement basis. A summary of this notice will also be served electronically in Form GST DRC-01.
Key Step that the Suppliers Can Take:
- Don’t Panic
- Review the Show Cause Notice (SCN)/Assessment Notice.
- Check for Exemptions
- Separate Personal and Business Transactions
- Categorize Transactions
- Know the Threshold limits.
- Opportunity to be Heard
- Stay Updated
- Educate Your Peers
- take Legal Help
The impulsive GST adjudication drive of invoking tax liability on these vendors might place an excessive burden on small and middle-scale businesses. It increases genuine concerns about the practicality of GST compliance for small suppliers such as vegetable vendors, NGOs, and Kirana Shops.
Since small businesses play an important role in employment and economic growth, overburdening them may slow overall progress. Therefore, the government should release relief schemes to support and encourage small vendors.