GST Separate Registration | GST under RCM on rent of commercial property

[Nikunj Kishorbhai Tosar]

Fact of the case:

A Company is registered in Gujarat and is having an additional commercial space in Maharashtra where only marketing employees sit and no taxable supply of goods or services are made.

The office has been taken on rent from unregistered person.

As per Notification No. 09/2024-Central Tax (Rate) w.e.f. 10-10-2024, GST under RCM to be paid on Service by way of renting of any property other than residential dwelling from an unregistered person to any registered person.

Questions:

Question 1: Whether separate GST Registration Number is required to be obtained to pay GST under RCM on rent exp only even though there are no any taxable supplies are being made from Maharashtra?

Question 2: If answer to above Question is Yes, then whether ISD (Input Service Distribution) Registration is also mandatory to be obtained even though there are no such common expenses incurred at HO.

Your guidance on this matter will be highly appreciated.

[VENU K]

In my opinion separate registration is necessary because:

Section 22 of the CGST Act mandates registration in every state from where the taxable person makes a taxable supply.

The RCM liability arises at the place where the service is received, and renting of immovable property is a service tied to the location of the property (as per Section 12(3) of IGST Act).

Since RCM on renting becomes applicable, and the property is located in Maharashtra, the recipient (the company) is deemed to receive the service in Maharashtra.

GST under RCM must be paid using the registration in the state where the service is received.

As per Section 20 of the CGST Act and Rule 39, ISD registration is required only when common input services used across multiple locations (HO and branches) need to be distributed proportionately. In this case since it is not applicable no ISD registration might be required.

My understanding

[Shilpi Jain]

A view can be taken that the company is not registered in MH and hence no RCM. Could be disputed.

[Nikunj Kishorbhai Tosar]

It would be of great help if any judgement or case laws available in support of this stand. Thanks

[Shilpi Jain]

If considering to take registration and pay GST, if it can be shown that this is common expense for the business in Guj. can distribute through ISD

AI Summary

Reverse charge on commercial rent requires registration in the State where the property is located to discharge RCM.
Reverse charge on renting of commercial property from an unregistered person is treated as received at the location of the immovable property; therefore, a recipient registered in a different State should obtain registration in the State where the property is located to discharge RCM. ISD registration is not mandatory unless there are common input services or expenses that need to be distributed across multiple establishments, in which case ISD may be adopted after taking appropriate registrations.