Section 139 of GST Act: Migration of existing taxpayers

Explanation of CGST Section 139(1)

1. Applicability and Purpose

Section 139(1) of the Central Goods and Services Tax (CGST) Act, 2017 deals with the migration of existing taxpayers into the GST regime. It ensures a smooth transition for businesses that were already registered under previous indirect tax laws (such as VAT, Service Tax, or Excise Duty) before the implementation of GST.

2. Key Provisions

• “On and from the appointed day” → This refers to July 1, 2017, when GST was officially implemented in India.
• “Every person registered under any of the existing laws” → Businesses and individuals registered under previous tax regimes (VAT, Service Tax, Excise, etc.).
• “Having a valid Permanent Account Number (PAN)” → PAN is mandatory for businesses to be migrated to GST.
• “Shall be issued a certificate of registration on a provisional basis” → Such taxpayers were automatically granted a Provisional GST Registration Certificate to continue operations under GST.
• “Subject to such conditions and in such form and manner as may be prescribed” → The government prescribed specific rules and documentation requirements for obtaining the final GST registration.
• “Unless replaced by a final certificate of registration under sub-section (2)” → The provisional registration would later be converted into a Final GST Registration upon fulfillment of required conditions (such as submission of documents).
• “Shall be liable to be cancelled if the conditions so prescribed are not complied with” → If the taxpayer failed to comply with the prescribed conditions (e.g., verification of documents, submission of required details), the provisional GST registration would be cancelled.

3. Practical Implication

This section ensured that businesses continued to function smoothly under GST without disruptions. However, they had to complete the formalities to obtain permanent registration; otherwise, they risked cancellation of their GST registration.

Explanation of CGST Section 139(2)

1. Purpose of the Provision

Section 139(2) of the Central Goods and Services Tax (CGST) Act, 2017 outlines the process for converting a provisional GST registration (granted under Section 139(1)) into a final GST registration certificate. It ensures that only eligible businesses that meet the required conditions continue under the GST system.

2. Key Provisions

• “The final certificate of registration shall be granted” → Once a business fulfills the prescribed requirements, it is issued a permanent GST registration certificate.
• “In such form and manner” → The government has prescribed specific procedures and formats for the final registration (through GST rules and notifications).
• “Subject to such conditions as may be prescribed” → Taxpayers must meet certain conditions, such as:
  • Verification of business details and documents.
  • Submission of required information within the stipulated time.
  • Compliance with GST laws and regulations.

3. Practical Implication

• Businesses that successfully completed the migration process (by submitting necessary details and documents) received their final GST registration certificate.
• If a taxpayer failed to meet the conditions, the provisional registration was canceled (as mentioned in Section 139(1)).
• This ensured that only genuine and compliant taxpayers remained registered under GST.

Explanation of CGST Section 139(3)

1. Purpose of the Provision

Section 139(3) of the Central Goods and Services Tax (CGST) Act, 2017 provides relief for taxpayers who were erroneously migrated to GST but were actually not liable for registration under the new tax regime. It allows them to cancel their provisional GST registration if they were not required to be registered under Section 22 or Section 24.

2. Key Provisions

• “The certificate of registration issued to a person under sub-section (1)”
  • This refers to the provisional GST registration that was automatically granted to businesses previously registered under old tax laws (VAT, Service Tax, Excise, etc.).
• “Shall be deemed to have not been issued”
  • If the taxpayer was not actually required to register under GST, the provisional registration is treated as if it never existed once canceled.
• “If the said registration is cancelled in pursuance of an application”
  • The taxpayer must apply for cancellation if they believe they are not liable for GST registration.
• “That he was not liable to registration under section 22 or section 24”
  • Section 22 → Specifies the threshold turnover limit for mandatory GST registration (₹20 lakh for most states and ₹40 lakh for goods in some states).
  • Section 24 → Lists categories of taxpayers who must register for GST irrespective of turnover (e.g., inter-state suppliers, e-commerce operators, etc.).
  • If a taxpayer does not fall under these categories, they can opt-out of GST by applying for cancellation.

3. Practical Implication

• Many businesses automatically migrated to GST but later realized they were not required to be registered.
• Instead of forcing them to comply unnecessarily, Section 139(3) allowed them to opt-out and have their registration nullified.
• This ensured that only eligible and required taxpayers remained within the GST system.