Mandatory registration for Non Resident

[Ethirajan Parthasarathy]

A non-resident is getting rent of 18 lacs PA from commercial property situate in India. He has not executed any power of attorney for managing the property.

Is he liable for mandatory registration under section 24 of GST Act or he can avail threshold limit 20 lacs exemption.  

If GST is applicable, I presume he has to charge CGST and SGST and not IGST

As per “CAGPT”, non-residents are hit by mandatory registration as per section 24 of CGST Act notwithstanding quantum of turnover.

AAR Karnataka has not discussed anything about mandatory registration by non-resident in the case of Nagbhushana Narayana 2023(4) TMI 903.  One of the arguments of the applicant is renting of commercial property by non-resident should be treated as “Import of Service.

I request experts to clarify..

[Shilpi Jain]

In my view registration should not attract as there is no occasional supply made. 

WOuld suggest that the NRI appoints an agent for this to be able to defend in case department disputes.

[Yash Shah]

As per section 24, which states that notwithstanding anything contained in sub-section (1) of section 22, the list given in the section 24 shall be liable to be registered under the CGST ACT, 2017. In which non-resident taxable person making taxable supply covers also.

As per section 2(77) "non-resident taxable person" means any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

Section 2(50) "fixed establishment" means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs.

Section 2(85) "place of business" includes-

(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or

(b) a place where a taxable person maintains his books of account; or

(c) a place where a taxable person is engaged in business through an agent, by whatever name called;

(71) "location of the supplier of services" means,-

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and

(d) in absence of such places, the location of the usual place of residence of the supplier;

As per section 2(11) of IGST Act, 2017 “import of services" means the supply of any service, where-

(i) the supplier of service is located outside India;

(ii) the recipient of service is located in India; and

(iii) the place of supply of service is in India;

As per section 7(4) of IGST Act, 2017 Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce. (1/2)

[Yash Shah]

As per Section 13(4) of IGST Act, 2017 The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located.

Client is not to be considered as non-resident taxable person as the activity happening here is not to be considered as occasionally. As per section 2(50), 2(71) and 2(85) of CGST Act, 2017 client has no fixed establishment and no place of business so the location of supplier of service is residence of the supplier. which will be other country.

As per section 13(4) the place of supply in our case is in India so as per section 2(11) the supplier is outside India and the location of recipient is in India and place of supply is also in India so this transaction is treated as import of service and that is why tax to be charged is IGST as it is an inter-state trade as per section 7(4) of IGST Act, 2017.

As per Notification No. 10/2017-Integrated Tax (Rate) with section 5(3) of IGST Act, 2017 any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient, then in this case, tax is paid by the recipient of the service.

As per section 20 of IGST Act, 2017, section 22 of CGST Act, 2017 shall apply mutatis mutandis in relation to integrated tax. So as per notification 5/2017 of central tax rate, if a person exclusively in supply of goods or services which are liable under RCM so he not need to take registration.

So in our case, the client is not liable to take registration under GST and the said supply of service will be liable under RCM. (2/2)