Person Under Udyam
Chapter Three
Syllabus topic 1, "Meaning and concept of “Person” under Income Tax Law, GST Law, Udyam"
Pages 5 to 6 of 80
Read this first, because the question is not what it looks like
MU's topic line reads "Meaning and concept of "Person" under Income Tax Law, GST Law, Udyam", and it is natural to expect a third definition of person.
There is no definition of "person" in the Micro, Small and Medium Enterprises Development Act, 2006, and none in the Udyam notification. A candidate who invents one is inventing law.
What Udyam has instead are two things, and between them they answer the question MU is actually asking:
- Section 7 of the MSMED Act lists the forms an enterprise may take, which is the nearest thing the Act has to a list of persons.
- Paragraph 6 of the Udyam notification says whose Aadhaar number is used for each of those forms, which is the practical question a registering firm faces.
The forms an enterprise may take
Section 7(1) of the MSMED Act 2006 empowers the Central Government to classify
any class or classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called
Seven forms, and the closing words "by whatever name called" make the list open.
Note what is different from the two tax statutes. The MSMED Act's subject is the enterprise, not the person who owns it. A proprietorship is named as a form of enterprise, though in income-tax law there is no such person: a proprietor is taxed as an individual.
Whose Aadhaar is used, which is the operative rule
Paragraph 6 of S.O. 2119(E) dated 26 June 2020, the notification that created Udyam registration:
(3) Aadhaar number shall be required for Udyam Registration.
(4) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
(5) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
That is the answer to MU's question. Udyam does not ask who the person is; it asks whose Aadhaar identifies the enterprise.
| Form of enterprise | Whose Aadhaar | What else is needed |
|---|---|---|
| Proprietorship firm | The proprietor | PAN and GSTIN of the proprietor |
| Partnership firm | The managing partner | PAN and GSTIN of the firm |
| Hindu undivided family | The karta | PAN and GSTIN of the HUF |
| Company | The authorised signatory | GSTIN and PAN of the company |
| Limited liability partnership | The authorised signatory | GSTIN and PAN of the LLP |
| Co-operative society, society, trust | The authorised signatory | GSTIN and PAN of the organisation |
Person Under Udyam
Note the split. For the first three the Aadhaar is that of a named natural person holding the office. For the rest it is the authorised signatory's, and the organisation's own PAN and GSTIN carry the identification.
MU's own scope note confines this paper to individuals and partnership firms, so the first two rows are the ones her examples will use.
One enterprise, one registration
Paragraph 6(7) of the notification:
No enterprise shall file more than one Udyam Registration:
Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
And paragraph 3(3), which decides what counts as one enterprise:
All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.
So under Udyam the unit is the PAN. Every GSTIN hanging off one PAN is one enterprise, and their figures are added.
Compare that with GST, where section 25(4) treats each registration as a distinct person and a stock transfer between two of them is a taxable supply. The same PAN with two GSTINs is one enterprise for Udyam and two persons for GST. That is the sharpest single contrast between the three statutes, and the next chapter puts it in a table.
What is not required
Paragraph 6 also settles what a registering enterprise does not need, and each is worth a mark:
- No fee. Paragraph 6(2).
- No documents, papers, certificates or proof. Paragraph 2(1); the registration is on self-declaration.
- No physical visit. The whole process is on the Udyam Registration portal.
The portal itself warns that no private agency is authorised to do this and that it is free. A student should know that, because the fraud is common and the syllabus is training people who will be asked to do it for others.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.