In re Lakshmi Tulasi Quality Fuels (GST AAR Andhra Pradesh)
The applicant seeks advance ruling on whether she is eligible for the exemption from payment of GST on the monthly rentals received by her on lease of her residential building at Telangana to D-Twelve Spaces Private Limited, as per SI.No. 13 of the Notification No. 9/2017 Dt: 28-6-2017.
Though the applicant claims that she has rented out residential dwelling for use as residence, it appears that the premise is a non-residential property. Considering the number of rooms and amenities provided in it, boarding and hospitality services extended to the inmates and all the clauses of the agreements discussed below, it appears that the building was constructed for the purpose of running a lodge house. It is clear that the lessee is engaged in commercial activity of renting of rooms in the dwelling and providing boarding and hospitality services to the inmates.
Therefore, it is clear that the lessor has rented out her dwelling for commercial activity, and supply of such services, in the facts and circumstances of the case, are classifiable as “Rental or leasing services involving own or leased non-residential property” under Service Code (Tariff) 997212. It is taxable in the hands of the lessor and is liable for IGST at the rate of 18 percent.
Read AAAR Order : No GST exemption on leasing of real estate property for Business
FULL TEXT OF ORDER OF THE AUTHORITY OF ADVANCE RULING, ANDHRA PRADESH
ORDER
(Under sub-section (4) of Section 98 of Central Goods and Services Tax Act, 2017 and sub- section (4) of Section 98 of Andhra Pradesh Goods and Services Tax Act, 2017)
1. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and AP Goods & Services Tax Act, 2017 (herein after referred to CGST Act and AP GST Act respectively) by M/s Lakshmi Tulasi Quality Fuels, (herein after referred to as applicant), registered under the Goods & Services Tax.
2. The provisions of the CGST Act and APGST Act are identical, except for certain provisions. Therefore, unless a specific mention of the dissimilar provision is made, a reference to the CGST Act would also mean a reference to the same provision under the APGST Act Further henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or AP GST Act would be mentioned as being under the GST Act.
3. Brief Facts of the case:
M/s. Lakshmi Tulasi Quality Fuels, (herein referred to as applicant) holding GSTIN 37ALMPD5548B1Z7, having registered address at Sy.No.73 Railway Station Road, Yreemukapalli, YSR District, Kadapa (Cuddapah) Andhra Pradesh, 516001 are registered taxable person. The applicant is having Petrol bunk and engaged in supply of petroleum oils and lubricants. Further, the applicant is the absolute and sole owner of a building located at Plot No.67, Padmashree Gardens, Vattinagulapally, Rajendra Nagar, R. R. Nagar, Telangana. The applicant has entered into a lease agreement dt: 31-7-2019 with D-Twelve Spaces Private Limited (hereinafter referred to as ‘Lessee’) a company incorporated under the provisions of the Companies Act, 2013 which is inter alia engaged in the business of running, managing and operating the day to day affairs of residential premises and sub lease of such residential premises to individuals (including students) for the purpose of long stay accommodation As per the terms of the Lease agreement, in consideration of grant of lease to use and possess the aforesaid property the lessee is required to pay to the applicant a monthly rent of Ks 7,20, 000/- and all operational costs such as electricity, telecom and water charges as per the actual meter reading or based on the invoice or the bill issued by the relevant authorities.
Further, as per the terms of the lease agreement, the lessee has the right to sublease the aforesaid property during the lease term to any third party with prior intimation to the applicant for the purpose of long stay accommodation.
4. Questions raised before the authority:
The applicant seeks advance ruling on whether she is eligible for the exemption from payment of GST on the monthly rentals received by her on lease of her residential building at Telangana to D-Twelve Spaces Private Limited, as per Sl.No.13 of the Notification No.9/2017 Dt:28-6-2017.
On Verification of basic information of the applicant , it is observed that the applicant falls under State jurisdiction, i.e. Assistant Commissioner (ST), Kadapa-I Circle, Kadapa Division. Accordingly the application has been forwarded to the jurisdictional officers and a copy marked to the Central tax authorities to offer their remarks as per the Sec. 98(i) of CGST /APGST Act 2017.
In response, remarks are received from the jurisdictional officer concerned stating that there are no proceedings lying pending or passed relating to the applicant on the issue, for which the Advance Ruling sought by the applicant
5. Applicant’s interpretation of law and facts:
The applicant’s contention is that she is eligible for the exemption from payment of GST granted under Si.No.13 of Exemption Notification, i.e. Notification No.9/2017 Dated 28-06-2017, the reference of which is extracted below:
