2019 (6) TMI 1340 - AAR - GST

Levy of GST on supply - supply even if the recipient is using the dwelling unit for residential purpose - Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 (corresponding state Notification No. 1136 - FT dated 28/06/2017) - HELD THAT - It appears that the dwelling units rented to individuals, as described in the relevant contracts, are meant for residential accommodation. The dwelling unit rented to M/s. Larsen Toubro Ltd is a flat in the housing complex named South City. The South City Apartment Owners Association certifies that the Applicant owns the flat and it is a residential flat and cannot be used for any other purpose. The said association further confirms that an employee of M/s. Larsen Toubro Ltd is staying at the flat. The Applicant s service is classifiable as rental or leasing service involving own/leased residential property (SAC 997211). Applicability of Sl No. 12 of the Exemption Notification depends upon whether the dwelling unit is used as residence. It appears from the documents produced that all the above dwelling units are being used for residence, irrespective of whether they are let out to individuals or a commercial entity. The Applicant s service of renting/leasing out the dwelling units for residential purpose is, therefore, exempt under SI No. 12 of the Exemption Notification. The Applicant s service of renting/leasing out the dwelling units for residential purpose, as described in para no. 4.1, is exempt under Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017), as amended from time to time. The Applicant is, therefore, not liable to pay tax on supply of such service.

Summary

Issues:
1. Admissibility of the Application
2. Submissions of the Applicant
3. Submissions of the Revenue
4. Observation & Findings of the Authority

Admissibility of the Application:
The Applicant sought a ruling on the liability to pay GST on renting dwelling units for residential purposes. The Application was admitted as the question raised was not previously decided or pending before any authority under the GST Act.

Submissions of the Applicant:
The Applicant leased four dwelling units for residential use, arguing that services by way of renting dwelling units for residence are exempt under the Exemption Notification. The Applicant contended that tax should not apply as the units were rented for residential purposes.

Submissions of the Revenue:
The Revenue contended that the Exemption Notification does not apply when a dwelling unit is rented to a commercial entity. They argued that the exemption for renting dwelling units for residential purposes should not extend to commercial entities.

Observation & Findings of the Authority:
The Authority observed that all dwelling units, whether rented to individuals or a commercial entity, were being used for residential purposes. The service provided by the Applicant falls under rental or leasing service involving residential property and is exempt under the Exemption Notification. The ruling stated that the Applicant is not liable to pay tax on supplying such services.

Ruling:
The Authority ruled that the Applicant's service of renting out dwelling units for residential purposes is exempt under the Exemption Notification. The Applicant is not required to pay tax on such services unless declared void under the provisions of the GST Act.