QUESTION

One Private Limited Company enged in manufacturing of Cotton yarn registerd in Gujarat. They want to take new registration in Gujarat for their Trading activities. Can they opt for New Registration with Same name and PAN in Same State? If Yes, can they sale their manufacture goods to their Trading registration in same state with charging CGST and SGST ?

ANSWER

Facts of the case: Manufacturing company registered in Gujarat wants to take new registration for trading activities in Gujarat.

Law Applicable: SECTION 22 OF CGST ACT

(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees

SECTION 25 OF CGST ACT

(2) A person seeking registration under this Act shall be granted a single registration in a State or Union territory:
Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.
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(4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

Interpretation: Registration in GST is not activity-based, you can start trading activities and manufacturing activities under single registration.
However if from Management Control point of view you want to take separate registration, then you can apply for separate registration for trading activities. In this case both units are treated as distinct persons as per section 25 of CGST Act and you are required to transfer goods from manufacturing unit to trading unit on taxable invoice by following valuation rules. Also in case of 2 registrations provisions of Deemed supply may attract.
We suggest you to have single registration for manufacturing and trading activities, even you can start any number of activities under single registration. In this case there is no need to follow valuation rules for transfer of goods or utilisation of services from one unit to other and it will help in easy maintenance of records. Further you can add trading place i.e. store, godown as additional place.

Conclusion: You can have single /multiple registration for different activities, however having single registration helps in easy compliance and you are not required to follow valuation rules for inter unit transfer of goods.(Reply dt.9/3/2020)