# Section 23: Persons NOT Liable for Registration

Section 23 is the safety-net that exempts certain categories from registration even where Section 22 or 24 would otherwise apply.

## Section 23(1) — Automatic Exemption

### (a) Persons exclusively engaged in supplying NON-TAXABLE or WHOLLY EXEMPT goods/services

No registration is required, irrespective of turnover.

### (b) Agriculturist — to the extent of supply of produce out of cultivation of land

'Agriculturist' [Sec 2(7)]: an individual or HUF who cultivates land:

by own labour, OR
by labour of family, OR
by servants on wages payable in cash/kind, or by hired labour under personal supervision (or supervision of any family member)

If the agriculturist supplies anything beyond cultivated produce, registration is required subject to the threshold limit.

## Section 23(2) — Government-Notified Exemptions

### A. Persons making only RCM outward supplies (Sec 9(3))

Exempted — except suppliers of metal scrap (Chapters 72–81).

### B. Inter-State suppliers of TAXABLE SERVICES up to ₹20 lakh (₹10 lakh in 4 special states)

Exempt despite Section 24(i).

### C. Inter-State suppliers of NOTIFIED HANDICRAFT GOODS up to ₹20 lakh

Conditions:

Aggregate value ≤ ₹20 lakh (₹10 lakh in special states) on all-India basis
Must have PAN and generated e-way bill

### D. CTP making inter-State supplies of NOTIFIED HANDICRAFT GOODS up to ₹20 lakh

Conditions:

Avails Notification 03/2018-IT
Aggregate value ≤ ₹20 lakh (₹10 lakh in special states)
Has PAN & e-way bill

### E. Suppliers of SERVICES through ECO (other than 9(5) services), turnover up to ₹20 lakh

ECO must be liable to collect TCS u/s 52
All service providers (intra-State, inter-State, or via ECO) ≤ ₹20 lakh (₹10 lakh special states) — exempt

### F. Intra-State suppliers of GOODS through ECO (within threshold limit) — Conditions

(i) Shall not make inter-State supply of goods

(ii) Shall not supply goods through ECO in more than one State/UT

(iii) Must have PAN under Income-tax Act, 1961

(iv) Must declare on common portal before any supply: PAN, place of business address, and State/UT — subject to validation

(v) On successful PAN validation → enrolment number granted

(vi) Only one enrolment number per State/UT

(vii) No supply through ECO permitted until enrolment number granted

(viii) If subsequently granted regular registration u/s 25, enrolment number ceases from effective date

## Special Case — APMC Commission Agents (Agricultural Produce)

Scenario: A (agriculturist) sells via B (commission agent under APMC Act).

Invoice raised by	Is B an 'agent' under Schedule I?
Mr. A (principal)	No — B is not treated as agent
Mr. B	Yes — Para 3 of Schedule I deems supply even without consideration

Registration position of such commission agents:

1. Sec 24: Mandatory registration as agent applies only if (i) principal is taxable, AND (ii) supply is taxable. Since agriculturist (principal) is NON-taxable, the agent is not liable u/s 24.

2. Sec 23(1)(a): Sale/purchase of agricultural produce is exempt → commission agent dealing exclusively in such produce is NOT liable for registration.

3. Commission agents who are also liable to pay tax under RCM for any other services → must register.

Worked example

### Example 1

Example 1 (Madhur Oils): Madhur Oils exclusively supplies non-taxable petrol. Section 23(1)(a) applies — no GST registration required, regardless of turnover.

### Example 2

Example 2 (Bhavyajyoti Foundation): Exclusively provides exempt charitable services under section 12AB of the Income Tax Act → no registration required.

### Example 3

Example 3 (Deshbandhu — agriculturist turned trader): Earlier only sold wheat from his cultivation — exempt under Sec 23(1)(b). This year started trading in pre-packaged & labelled puffed rice (taxable supply not from cultivation). Aggregate turnover ₹41 lakh in Punjab → exceeds ₹40 lakh threshold → GST registration required.

### Example 4

Example 4 (APMC commission agent): B is an APMC commission agent selling tomatoes (agricultural produce, exempt) for agriculturist A. B invoices in his own name. Although Schedule I treats him as agent, since supply is exempt, Sec 23(1)(a) saves him — no registration required.

### Example 5

Example 5 (Service provider through ECO): A freelance designer with ₹15 lakh turnover supplies design services through Fiverr (an ECO liable for TCS). Section 23(2)(E) exempts him from registration (≤ ₹20 lakh).

⚠️ Common exam mistakes

Registering an exclusive seller of non-taxable goods (like petrol or alcoholic liquor) — exempt under Sec 23(1)(a) even if turnover is in crores.
Treating a HUF cultivating land via hired labour without personal supervision as 'agriculturist' — supervision is required.
Forgetting that the metal scrap (Chapters 72–81) RCM supplier is NOT exempted by Sec 23(2)(A).
Missing the e-way bill + PAN conditions for handicraft exemption (Points C & D).
Allowing an enrolled goods supplier to also make inter-State supplies through ECO — disqualifies the exemption under Point F.
Treating APMC commission agents of agricultural produce as agents needing compulsory registration — they are exempt because the supply itself is exempt.

Bare-Act text Section 23 · CGST Act, 2017 · click to expand

Section 23(1): The following persons shall not be liable to registration, namely:— (a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act; (b) an agriculturist, to the extent of supply of produce out of cultivation of land. Section 23(2): The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.

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Section 23 - Persons Not Liable for Registration

Worked example

⚠️ Common exam mistakes