GST Applicable on Increased Rents for Past Periods: AAR Tamil Nadu

Summary: The Authority for Advance Ruling (AAR) in Tamil Nadu addressed the applicability of GST on increased rents for past periods in the case of M/s. Metropolitan Transport Corporation. The case arose from a lease agreement with the Government of Tamil Nadu, originally established in 2005. Due to unresolved negotiations, a rent revision had been delayed until a mutual agreement was reached in the fiscal year 2023-24 to increase the rent by 15% every three years. The total differential amount to be paid by the Regional Transport Officer was calculated at ₹1,60,42,203. The applicant contended that since the revised rent pertains to a period prior to the introduction of GST on July 1, 2017, it should not be subject to GST. However, the AAR determined that under Section 142(2)(a) of the CGST Act, any upward price revision in a contract initiated before the appointed day requires the issuance of a supplementary invoice or debit note within 30 days of the revision. This ruling established that the increased rents from September 1, 2005, to June 30, 2017, would indeed be treated as a supply under GST, thus making the entire increased amount liable for tax. This decision underscores the continuity of tax obligations despite transitional provisions related to the introduction of GST.