GPA holder leasing commercial property for NRI owner liable for GST registration and payment

The Karnataka AAR held that a GPA holder leasing commercial property on behalf of an NRI owner is liable for GST registration and payment. The applicant, working outside India, executed a GPA authorizing his mother to manage his Bangalore commercial property, including tenant induction and rent collection. The AAR determined that the GPA holder, being the actual supplier of leasing services and receiving rental income, must register and pay CGST and KGST at 9% each. Since both the property location and supplier are in Karnataka, it constitutes intra-state supply under IGST Act provisions.

---

---

Issues involved:
The judgment addresses the liability of registration under KGST/CGST Act 2017 for a non-resident Indian owning property in India and renting it out, as well as the requirement to pay tax on renting a commercial building.

Liability to be registered:
The applicant, a non-resident Indian, argued that as he resides outside India and does not have a fixed establishment in India, he is not liable for registration in India or for payment of GST under CGST Act 2017. However, the General Power of Attorney (GPA) granted to his mother empowered her to manage the property, including leasing it out for commercial purposes. The GPA holder, being the supplier of the service of leasing the property, is held liable for registration under Section 22(1) of the CGST Act 2017, as the place of supply and location of the supplier are both in Karnataka.

Tax on renting of commercial building:
The applicant contended that the responsibility to pay tax is on the service recipient under the reverse charge mechanism, and thus he is not liable to pay tax on the rental income. However, it was determined that the GPA holder, as the supplier of the Renting of Immovable Property service, is required to pay CGST and KGST of 9% each on the taxable value of the service provided. The supply of service directly related to immovable property in Bangalore, Karnataka, constitutes intra-state supply, making the GPA holder liable for tax payment under the relevant provisions.

Separate Judgment:
The ruling issued states that Smt. Prabhavathi, the GPA holder, is the supplier of service and is liable to be registered in Karnataka under KGST/CGST Act 2017. Additionally, Smt. Prabhavathi is required to pay tax on the supply of Renting of Immovable Property service of the commercial building.

---