Renting of Commercial Properties

[Kaustubh Karandikar]

XYZ (Maharashtra) is the owner of commercial properties situated within as well as outside Maharashtra. These properties are given on rent for commercial use. XYZ is having his office in Mumbai which is registered with GST for issuing Tax Invoice for rent against these properties. 1) Whether XYZ is required to declare all properties within Maharashtra given on rent as additional place of business? 2) Whether XYZ is required to take separate GST Registration for properties outside Maharashtra or he can issue invoice under the GST Registration of Mumbai by charging IGST?

[KASTURI SETHI]

Dear Sir,

Query-wise reply is as under:-

1. Yes.

2. If XYZ has an establishment other than registered outside Mahrashtra XYZ can issue invoice from Mumbai charging IGST, If XYZ has not establishment other than registered outside Maharashtra, then XYZ is required separate registration for office State-wise. See Section 25(5) of CGST Act, 2017 read with Section 2(85) of CGST Act.

[Rajagopalan Ranganathan]

Sir,

As per Section 12 (3) of IGST Act, 2017 "the place of supply of services, -

(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or

(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or

(c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or

(d) any services ancillary to the services referred to in clauses (a), (b) and (c),

shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located :

Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

Explanation. - Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

In view of the above provisions of the law you have to take separate registration in respect of properties locagted outsid the Maharashtra State.

[KASTURI SETHI]

Dear Sir (Querist), There are so many factors to determine place of supply which become basis for declaring principal place of business in the application for registration under GST. Keeping in view scenario explained by you and my reply dated 14.3.19, I stick to my views.

[CASusheel Gupta]

In my opinion

1) The immovable properties which are being let out and are not used for business purpose will not constitute "Place of Business: and is not required to be declared as Additional Place of Business.

2) Provisions of 12(3) are only for ascertaining the Place of Supply and are not deciding factors for availing registration which has to be strictly as per section 22. Separate state wise registration is not required and IGST can be charged from Mumbai registration.

CA Susheel Gupta

9811004443

[KASTURI SETHI]

I agree with Sh.Sushil Gupta, C.A. on both points.

AI Summary

Place of Supply rules determine whether GST registration and IGST charging apply to inter state commercial property rentals.
Whether a registered Mumbai-based owner must declare rented immovable premises as an additional place of business and whether separate State registrations are required for properties located outside the registered State depends on statutory registration criteria and place-of-supply rules. One line of advice treats such properties as additional places of business and calls for separate registration absent an establishment outside the registered State; another relies on place-of-supply rules to require Statewise registration; a third view treats rented properties not used for the owner's business as not constituting additional places of business and allows charging IGST from the existing registration for inter state rent.