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CMA Intermediate · Direct and Indirect Taxation · Registration

Sundaram Traders Pvt Ltd, a Chennai-based company, holds GST registration in Tamil Nadu and also opens a branch in Karnataka from which it makes taxable supplies. Under the CGST Act, 2017, how are the Tamil Nadu and Karnataka establishments treated?

The two establishments are treated as establishments of distinct persons under the Act, because a person with an establishment in another State must be separately registered there. Sharing the same PAN or the size of turnover does not change this treatment.

  1. AAs establishments of the same person, so supplies between them are not supplies
  2. BAs establishments of distinct persons for the purposes of the ActCorrect
  3. CAs one establishment, as the PAN is the same
  4. DAs distinct persons only if the Karnataka turnover exceeds the threshold limit

Explanation

Section 25(5) provides that where a person registered in one State has an establishment in another State, the establishments are treated as establishments of distinct persons. Turnover in the second State is not a condition for this treatment, so the last option is wrong.

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