2020 (2) TMI 532 - AAR - GST

Maintainability of Advance Ruling application - levy of GST - sale of shop which is 44 yrs old - Liablity of GST, on lessor to the lessee / or any other person? - HELD THAT - Section 95 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. We find that the applicant has not undertaken the supply in the subject case. In fact, the applicant is a recipient of property in subject transaction. Thus, the condition under Section 95 is not satisfied by the applicant and hence, the issue is not within purview of this authority. The impugned transactions in not in relation to the supply of goods or services or both undertaken by the applicant and therefore, the subject application cannot be admitted. The subject application for advance ruling made by the applicant is rejected under the provisions of sub-section 2 of Section 98 of the CGST Act, 2017.

Summary

Issues:
- Whether GST is leviable on the sale of a 44-year-old shop between lessor to lessee or any other person?

Analysis:

1. Facts and Contentions:
The applicant sought an advance ruling regarding the GST leviability on the sale of a shop that is 44 years old. The applicant, who was a director in a company occupying the shop, purchased the property from the landlord. The applicant argued that the sale transaction should be exempt from GST under Clause 5(b) of Schedule II of the CGST Act, as the property was old and the entire consideration was received after completion certificate or first occupancy. The applicant also referenced the definition of "Supply" under the CGST Act and cited a Delhi High Court decision to support their claim.

2. Contention of the Jurisdictional Officer:
The jurisdictional officer did not submit any written contentions but orally mentioned that the question posed may not fall under Section 97(2) of the CGST Act.

3. Observations and Findings:
The Authority observed that the applicant was a recipient of immovable property, not a supplier. The authority stated that for an advance ruling, the matter should pertain to the supply of goods or services by the applicant. Since the applicant was not supplying goods or services but acquiring property, the case did not fall under the authority's purview. Therefore, the application was deemed not maintainable, and the ruling was rejected without discussing the merits of the case.

4. Order:
The Authority, based on the above findings, rejected the applicant's request for an advance ruling under the provisions of sub-section 2 of Section 98 of the CGST Act, 2017. The order was passed on January 15, 2020.

This judgment clarifies that for an advance ruling on GST leviability, the applicant must be involved in the supply of goods or services. In this case, since the applicant was acquiring property, not supplying goods or services, the application was rejected. The decision emphasizes the importance of the nature of the transaction in determining the jurisdiction of the Advance Ruling Authority.