Though GST was implemented to bring down complexities and ensure that common law is followed everywhere which is very necessary for promoting growth of business and industries. But with time it has been observed that not only the GST act has issues which are debatable and on which one may have difference of opinion thus making it subject to litigation, also there are multiple issues on which government does not come out with speedy clarifications to ensure that every officer follows similar view and to ensure that litigation comes down to a great extent.
Now during the special drive wherein GST office visited premises of multiple taxpayers a major issue came to light which was of obtaining multiple GST registrations from a single premise. Since the act does not explicitly clarify or lays down any rule in this matter different officers have seen to be imposing different views on the same matter. Through this article author would like to communicate his opinion on this particular matter.
1[Rule 11. Separate registration for multiple places of business within a State or a Union territory.-
(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 Place of business as defined in clause (85) of section 2;
(b) such person shall not pay tax under section 10 for any of his places of business if he is paying tax under section 9 for any other Place of business;
(c) all separately registered places of business of such person shall pay tax under the Act on supply of goods or services or both made to another registered Place of business of such person and issue a tax invoice or a bill of supply, as the case may be, for such supply.
Explanation. - For the purposes of clause (b), it is hereby clarified that where any Place of business of a Registered person that has been granted a separate registration becomes ineligible to pay tax under section 10 , all other registered places of business of the said person shall become ineligible to pay tax under the said section.
(2) A Registered person opting to obtain separate registration for a Place of business shall submit a separate application in FORM GST REG-01 in respect of such Place of business.
(3) The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis mutandis, apply to an application submitted under this rule.]
Subs. by CGST (Amendment) Rules, 2019 dated 29.01.2019 w.e.f. 01.02.2019 for "11. Separate registration for multiple Business verticals within a State or a Union territory.-(1) Any person having multiple Business verticals within a State or a Union territory, requiring a separate registration for any of its Business verticals under sub-section (2) of section 25 shall be granted separate registration in respect of each of the verticals subject to the following conditions, namely:-
(a) such person has more than one Business vertical as defined in clause (18) of section 2;
(b) the Business vertical of a Taxable person shall not 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.
Explanation.- For the purposes of clause (b), it is hereby clarified that where any Business vertical of a Registered person that has been granted a separate registration becomes ineligible to pay tax under section 10, all other Business verticals of the said person shall become ineligible to pay tax under the said section.
(2) A Registered person eligible to obtain separate registration for Business verticals may submit a separate application in FORM GST REG-01 in respect of each such vertical.
(3) The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis mutandis, apply to an application submitted under this rule."
Prior to CGST amendment rules 2019 there was a specific condition under Rule 11 that to obtain multiple registrations Taxpayer was required to Have multiple Business verticals. Business vertical was previously defined under Clause 18 of Section 2 which has also been omitted with effect from 01.02.2019. Now Since the condition of Business vertical has been removed in the newly substituted rule 11 another condition has been added that to obtain multiple registration taxpayers should have more than 1 Place of business as defined under clause 85 of section 2. Definition of place of business is reproduced as under-
“(85) “Place of business” includes—
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a Taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a Taxable person maintains his books of account; or
(c) a place where a Taxable person is engaged in business through an agent, by whatever name called;”
It can be understood that a person can obtain multiple registration even for businesses with similar verticals provided. It is also worth noting that at any place wear records and books are kept can also be considered as a place of business. So if the taxpayer intends to separate office work and business operations again effectively do so by keeping stock at one place and keeping records and books at a different location.
Rule 11 applies to obtaining multiple registrations by a single person. Which brings another question whether multiple taxpayers can obtain a registration at a single premise. Now the act appears to be silent on this matter but on the same time there does not contain any express prohibition on doing so. In the present day and era Business models have changed to a great extent for example A lot of people carry out work on contract or freelance basis and all they’re required to do is to provide services to the person who has awarded the work to the freelancer person through his computer. Now at times maintaining a complete independent office for just a single person operation or an operation that requires hardly two to three people is a very expensive task and maintaining an independent office also requires taking care of lot of other factors such as making provision for Internet, electricity, furniture, interior etc. It may also happen that the taxpayer is engaged in construction activities and he may not be under a requirement from business point of view to maintain a separate office as all of the activities of the contractor are carried out at the construction site itself so if there were a option where multiple contractors can share a single premise, it would not only help such contractors save some costs but shall also help avoId unnecessary inconveniences.
At this point in time there aren’t major judicial pronouncements to support the case at hand but insights can be drawn from a ruling of Advanced Ruling Authority Kerala in case of M/S SPACELANCE OFFICE SOLUTIONS PVT. LTD.  14 TAXLOK.COM 064 (AAR-Kerala) Relevant extracts from the ruling are reproduced as under-
The applicant is engaged in the business of sub leasing of office spaces as "co-working spaces" to their clients, The lease agreement between the applicant and landlord permit sub leasing and accordingly they obtain NOC from landlord for registering GST for the customers. The applicant provides dedicated land line number, fax number, high speed internet, air conditioning, housekeeping, pantry with drinking water, power back up, receptionist support, letter and postage handling and meeting room to the clients. In the "co-working space model" the petitioner offers dedicated distinct and identifiable space, tables and chairs to each clients working there. Each client company is working as separate and identifiable office within the main office. These companies are maintaining their financial records in electronic form and very well accessible from the "co-working space" at all the time.
The applicant requested advance ruling on the following:-
“Can GST registrations allowed for multiple companies from same address, provided they follow all GST rules related to "Principal Place of business"? These are start-up companies in service sector, where no stock has to be maintained.”
There is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the land lord permits such sub leasing as per the agreement. Each "co-working space" is demarcated with different suit number or desk number. As the GST registration is based on PAN, identification of tax payer is not a difficult thing.
While applying for GST registration for the co-working space, the rental agreement with the land lord and lessee along with the agreement between lessee and sub lessee must be uploaded as proof of address of principal Place of business of respective suit or desk number.
In addition to this, upload monthly utility bill in connection with payment towards electricity charges, water charges or Other common services availed by the respective suit or desk number. If so, there is no hindrance for applying GST registration for co-working space as it has a separate identity.
Separate GST registration can be allowed to multiple companies functioning in a `"co-working space" and which provide services alone.
If there is any sub-lease, then rental agreement between lessee and sub lessee should also be uploaded as proof of address of principal Place of business of respective suit or desk number assigned to them.
From the above it is crystal clear that there exists no statutory prohibition on obtaining multiple GST registrations from a single premise but also it is necessary to meet the changing needs of the businesses as businesses nowadays focus more on keeping their business model asset light and try not incurring heavy expenditure on furniture, separate connection for electricity and Internet or renting out of huge independent offices
CA Pranay Jain is a young and aspiring Chartered accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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