2019 (8) TMI 817 - AAR - GST

Co-working Companies Can Get Separate GST Registrations by Maintaining Distinct Records

Multiple companies operating in a co-working space can obtain separate GST registrations if they maintain distinct financial records and operate as ... GST registration for multiple taxpayers at a single premises - co-working space as distinct principal place of business - proof of principal place of business by rental/sub lease agreement and utility bills - identification of taxpayer based on PANGST registration for multiple taxpayers at a single premises - co-working space as distinct principal place of business - proof of principal place of business by rental/sub lease agreement and utility bills - identification of taxpayer based on PAN - Separate GST registrations for multiple companies operating from a shared 'co working space' address. - HELD THAT: - The Authority held that there is no prohibition under the GST law on granting separate registrations to entities operating from a shared or co working office provided the landlord permits sub leasing under the lease and the respective entities can demonstrate a distinct principal place of business. Identification of the taxpayer is by PAN, and therefore multiple registrations from the same overall premises are permissible where each sub unit is demarcated (for example by suit or desk number) and supported by documentary proof. The required proof includes the rental agreement between landlord and lessee and, where applicable, the sub lease between lessee and sub lessee, together with a monthly utility bill or other evidence of payment for electricity, water or common services for the particular suit or desk number. The Authority also noted that the GST registration granted must be displayed prominently and that books of account relating to the business must be kept at the declared principal place of business.Separate GST registration is permissible for multiple companies operating in a co working space that provide services, subject to production of lease/sub lease documents and utility bills as proof of distinct principal place of business, and compliance with requirements to display the GST number and maintain books at the principal place of business.Final Conclusion: The AAR allowed separate GST registrations for start up companies operating from the same co working address on the stated conditions: landlord's permission for sub leasing, appropriate rental/sub lease agreements and supporting monthly utility/common service bills as proof of the distinct principal place of business, with GST numbers displayed and books maintained at the declared premises. Issues:1. Whether GST registrations are allowed for multiple companies from the same address in a co-working space modelRs.Analysis:The case involved a business engaged in sub-leasing office spaces as co-working spaces to clients. The applicant sought an advance ruling on whether multiple companies from the same address in a co-working space could obtain separate GST registrations. The applicant highlighted that start-up companies found it unaffordable to lease independent offices in big cities, making co-working spaces a cost-effective solution. The issue arose when registration applications were rejected due to existing registrations at the same address. The applicant argued that separate registrations should be allowed as each company maintained distinct financial records and operated as separate entities within the shared space.The ruling authority examined the evolving trend of co-working spaces as a viable option for start-ups and the shared office culture replacing traditional office setups. It emphasized that there is no prohibition under GST law for obtaining registrations in shared or virtual office spaces, provided the landlord permits sub-leasing. Each co-working space must be demarcated with different suit or desk numbers, allowing for easy identification of taxpayers based on PAN. To apply for GST registration, the rental agreement with the landlord and lessee, as well as agreements between lessee and sub-lessee, must be uploaded as proof of address. Additionally, monthly utility bills related to electricity and other services must be submitted to establish the separate identity of each co-working space.In conclusion, the ruling stated that multiple companies operating in a co-working space and providing services alone can obtain separate GST registrations. The companies must submit necessary documentation, including rental agreements and utility bills, to demonstrate their individual presence within the shared space. This ruling aimed to facilitate start-ups and service sector companies in obtaining GST registrations while operating from co-working spaces, ensuring compliance with GST rules related to the principal place of business.