2020 (8) TMI 527 - AAAR - GST

Time Limitation for filing appeal - delay of 60 days - Renting services - Residential unit on Industrial plot - Exemption from GST - whether the same is an activity of renting of residential dwelling for use as residence which is exempted from GST by virtue of entry No 12 of Notification No 12/2017 CT (R) dated 28-06-2017? HELD THAT - The provisions of Section 100(2) of the CGST Act mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in terms of the proviso to Section 100(2) of the said Act, the Appellate Authority is empowered to allow the appeal to be presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days - In the instant case, the appeal filed against the Advance Ruling order dated 25.09.2019 is evidently belated by 60 days. The appellant, however, has not explained the reason for the delay in filing the appeal. Be that as it may, in the interest of justice, and considering the fact that the delay is within the condonable powers of this Authority, we are inclined to suo moto condone the delay in filing this appeal and proceed with a decision on the merits of this case. Renting services - Held that - KIADB is a statutory body constituted for the development of industries in the industrial areas of Karnataka. Lands are allotted by the KIADB to entrepreneurs only after the proposals for the proposed utilization of the land for industrial projects is approved by the competent authority. Therefore, it can be justifiably inferred that the land was allotted to the owner for industrial purposes and not for residential purposes. Therefore, the building on this land allotted by KIADB cannot be construed as residential building and consequently the building rented out by the owner to the Appellant was not a residential building. Therefore, the transaction between the owner Shri. Banraji B.H and the Appellants is not one of renting of residential dwelling for use as residence. This transaction is in the nature of renting of non-residential building and hence is liable to be taxed under Heading 997212 and chargeable to tax at 18% GST under entry Sl.No 16 of Notification No 11/2017 CT (R) dated 28-06-2017. Taxability of the charges for the additional facilities provided - Held that - The lower Authority s finding that this amounts to supply of goods as per entry no.1(c) of Schedule II to the Central Goods and Services Tax Act which reads any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of the full consideration as agreed, is a supply of goods . Accordingly, it is liable to tax at the rate applicable to each of the goods at the time the delivery of the goods is given to Sodexo Food Solutions India Pvt. Ltd. So also, the security services provided by the Appellant is liable to tax as applicable under SAC 998529 at 18% under entry 23(ii) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017. Decision of AAR upheld.

Summary

Issues Involved:
1. Classification of service provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited.
2. Classification of service provided by the building owner to Sri DMS Hospitality Private Limited.
3. Applicability of GST Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 on the services provided.
4. Applicability of GST on EMI per month charged from Sodexo Food Solutions India Private Limited and security services provided.

Detailed Analysis:

1. Classification of Service Provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited:
The Appellate Authority upheld the AAR's ruling that the service provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited is classified under SAC 997212. This classification is liable to tax under entry no. 16 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

2. Classification of Service Provided by the Building Owner to Sri DMS Hospitality Private Limited:
The service provided by the building owner to Sri DMS Hospitality Private Limited is also classified under SAC 997212 and is similarly liable to tax under entry no. 16 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

3. Applicability of GST Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017:
The Appellant contended that the service should be exempt from GST under Notification No. 12/2017-Central Tax (Rate) as "services by way of renting of residential dwelling for use as residence." However, the Authority found that the premises rented by the owner to the Appellant and subsequently sub-leased to Sodexo Food Solutions was not a residential dwelling. The building was located in an industrial area and was intended for industrial purposes, not residential use. Therefore, the exemption under Notification No. 12/2017-Central Tax (Rate) was not applicable.

4. Applicability of GST on EMI per Month Charged from Sodexo Food Solutions India Private Limited and Security Services Provided:
The EMI charged for additional facilities provided by the Appellant to Sodexo Food Solutions was considered a supply of goods under clause 1(c) of Schedule II to the CGST Act. This supply is liable to tax at the rate applicable to each of the goods supplied at the time of delivery. The security services provided were classified under SAC 998529 and are taxable at 18% GST under entry 23(ii) of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

Order:
The Appellate Authority upheld the Advance Ruling No. KAR/ADRG 86/2019 dated 25-09-2019 and dismissed the appeal filed by M/s. SRI DMS HOSPITALITY PRIVATE LIMITED on all counts. The delay in filing the appeal was condoned suo moto in the interest of justice.