GST: What is the way out for a small manufacturer under new tax regime

Inter-state supply of goods: GST registration required in the state from where you supply such goods

One of our firms is exclusively engaged in merchanting trade/third-country exports. We source products from Taiwan and Thailand and supply it to customers in Africa, West Asia, etc. The goods are shipped directly from the country of origin to the destination.  Since there would be no goods and services tax (GST) on the purchase or supply side, are we still required to obtain a GST registration and file returns, as the turnover would exceed the threshold on Rs 20 lakh?
 

Under the GST law, if the supplier of goods is located in India and the place of supply is located outside, the transaction should qualify as an inter-state transaction. In the transaction described by you, the location of supplier (your firm) is in India. Also, as the movement of goods terminates from one location outside India to another location outside India, therefore, the place of supply should be considered as being outside India. 
 

Upon reading of the provisions under the GST law, it appears aforesaid transaction should qualify as an inter-state transaction for the purpose of the GST law.  Currently, GST law doesn’t provide any specific exemption for such merchant export transactions. Therefore, such transactions can become taxable under GST. However, specific clarification is expected from the government in this regard. Based on such clarifications, it would need to be evaluated whether merchant export transactions should attract GST and whether you should be required to obtain GST registration/undertake related compliance.

I am a supplier of bitumen. My suppliers are in different states and I supply items to businesses across the country. While I am based in Maharashtra, I arrange for a supplier in Gujarat to send the goods to a buyer in the same state. But, the billing is done from Maharashtra. Under the GST, what tax do I need to charge? 
 

If a supplier of goods instructs its vendor to supply directly to a third person, it should be deemed that the supplier of goods has received the goods from its vendor at its principal place of business and the tax is to be determined, accordingly. 

Based on your facts, we understand your principal place of business is located in Maharashtra, for which you would have obtained GST registration number. Though, the vendor would supply the goods directly from its location in Gujarat to your customer’s location in Gujarat, it would be deemed that you had first received the goods at your location in Maharashtra. Subsequent, the supply of goods by you should be treated as supply from Maharashtra to Gujarat, which should attract integrated tax. 

I sell finished leather products. My turnover is much below Rs 20 lakh and therefore, don’t need to opt for a GST registration. But, my suppliers and buyers are insisting that I get a number and file regularly. My suppliers as well as buyers are based in different states. For now, I have stopped production. What is the way out for a small manufacturer like me? 
 

The GST law prescribes that a supplier of goods/services having an annual aggregate turnover of less than Rs 20 lakh (on a pan India basis) during a financial year should not be required to obtain GST registration. However, this threshold limit is not applicable if the supplier is undertaking inter-state supply of goods/services.   
 

Based on your query, it appears that you undertake inter-state supply of goods. Therefore, you should be required to obtain GST registration in the state from where you supply such goods, even if your annual aggregate turnover is less than Rs 20 lakh.
  

The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in