GST on rent received from building which is constructed from loan advanced by tenant - Goods and Services Tax - GST

In 2016, Tenant A advanced loan of Rs. 36 lakhs to Landlord B for construction of building. After construction, the building was let out to Tenant A at monthly rent of Rs 1 lakh for 3 years from 2017 to 2020. The rent payment was adjusted against the loan dues of Rs. 36 lakhs. Landlord B did not register himself under GST as the 36 lakhs received by him was not income liable to GST but in nature of loan. The Department has issued notice to Landlord B for (a) not registering himself under GST since 36 lakhs received is in the nature of advance rent and crossed the threshold limit of 20 lakhs and not paying 18% GST on entire amount of Rs. 36 lakhs. Landlord B is contending that when advance was received the building itself was not ready - how can it be advance rent? Rent will start accruing from date of occupancy and liability can be discharged on monthly basis on Rs. 12 lakhs per annum rent - also he has no other income other than this and since 12 lakhs is below threshold limit for registration, where is the need to register under GST? Quite an interesting case. Opinions, thoughts and suggestions are most welcome.